The Internet of Things, as a term, was coined in 1999 by Kevin Ashton, a British technologist. At the time, the concept of a network of connected devices was still the stuff of science fiction. Yet now, it is a reality, with IoT devices in supply chain management growing at a steady rate. And it does not show signs of slowing. Statista reports that IoT revenue worldwide for 2019 has reached $212 billion. This accounts for the 26 billion connected devices, a number that is sure to rise in the coming years.
IoT has pervaded the lives of individuals and there are homes built entirely on the concept. But ordinary consumers are not the only ones to take advantage of this technology. Industries, like construction, are actually at the forefront of adaptation, as they utilize it for their supply chain.
But before we move to that, let us discuss a bit about what IoT is and how IoT devices in supply chain management are creating growth.
What is IoT?
Internet of Things, or IoT for short, is a collection of devices that have chips embedded within them that gather data that are connected to the web. Homes and offices have these in the form of smart toasters, temperature controls, smart refrigerators, and more. Meanwhile, in the industrial setting, there are smart security systems, automatic vehicle trackers, and thermostats.
According to Wired, these interconnected devices that talk to each other can possibly usher in a fourth industrial revolution. Experts are even saying that by 2020, IoT will be a major aspect of businesses’ operations.
This is not far from happening, as more companies are realizing the importance of IoT devices in supply chain management. Plus, IoT sensors and devices are falling in price, making them more accessible to businesses.
Standardization of Data
In IoT, there is the concept of data supply chain management. This involves the standardization of data throughout the supply chain process. Data integration is foremost in materialising this. After this, companies can have a single source of truth, which can improve analytics and operations.
An IoT Case Study
DHL is a prime example among companies using IoT in supply chain that do so actively. Since they are responsible in whole or in parts of businesses’ supply chain management, warehousing, shipping, and distribution, it is no surprise that the logistics giant relies on IoT.
That is because IoT integrates various assets in the supply chain. With the connection, it is possible to gain comprehensive insights from the whole process. And using those insights, companies like DHL can transform their operations by becoming more efficient. They can do so through enhanced and automated customer-oriented services. In fact, according to FinancesOnline supply chain statistics, 57% of companies believe supply chain management gives them competitive leverage to improve their business.
Delving Deeper into IoT Devices in Supply Chain Management
The supply chain is made up of different processes:
- product development;
- production; and
The information systems required to oversee activities in those areas are part of the supply chain, too.
Product development is generally linear: Product Ideation & Market Analysis → Product Design → Manufacturing & Procurement → Commercialization → Aftersales Services
The problem with this is that there is no exchange of data between teams. Rather, information moves from one team to another in a downward direction.
Using IoT changes that: product development becomes circular.
In an article by Upchain, the once linear process revolves around customer data, which IoT plays a big part in gathering. This way, manufacturers know what users/consumers really think of their products or services. Thus, they can enhance their offerings based on hard data and ensure that they launch goods that work best for their target market.
Sourcing or procurement is another phase in the supply chain that IoT can revolutionize. According to Zycus, IoT enables companies to be vigilant with their spending. It also helps them keep a close eye on their customers’ spending behaviors. By basing their decisions on those pieces of information, businesses can intelligently and accurately estimate demand. From there, they can procure materials in the right quantity to support their production. As a result, they can prevent overspending and financial losses due to a lack of raw materials. Apart from that, smart sourcing can also curtail wastage.
The Internet of Things is transforming manufacturing: industries now have a network of sensors and other devices that feed them integral data from which they gain important and actionable insights.
Particularly, IoT has enabled manufacturers to accelerate their time-to-market. For example, Harley-Davidson reduced the time spent on a single motorbike from 21 days to six hours. With this, they managed to cut down their production costs. Other than that, IoT has allowed businesses to customize products en masse. This became possible as IoT devices provide real-time information to decision-makers, letting them produce reliable forecasts, better schedules, and enhanced routing.
Going back to DHL, the company’s logistics received a boost from IoT devices such as handheld scanners. This allowed employees to monitor the state of cargo as well as that of the cargo trucks. This smart inventory management also lets workers monitor inventory levels. With real-time visibility they get from IoT, any warehousing, logistics, and distribution company can enact mitigative actions in case goods get damaged, are misplaced, or out of stock.
A graphic showing how DHL utilizes IoT in their warehouses.
Meanwhile, in transportation, IoT permits shippers to track the location of their shipments whether they are on land, on air, or at sea. Apart from that, IoT sensors provide them real-time updates on the condition of packages. That includes whether or not packages have been opened to mitigate thefts.
Supply Chain Management in Construction
The rising complexity in buildings and the proliferation of contractors and specialist suppliers, products, as well as design fragmentation led to the demand for continuity in the construction industry. Hence, implementing supply chain management provides structure to the collaboration of construction contractors, service crews, and material suppliers, among other involved partners. Here are some of the core components of the supply chain in construction:
- Both the client and organizational goals and expectations,
- Required raw resources, processes, and information for the finished build,
- Traceability and delivery of services and products,
- Relationships between assets, activities, and people, and
- Construction logistics.
Application of IoT in Construction
IoT is applied in construction to enable a connected job site. Here are some examples:
- Supply replenishment – An on-site system can count and monitor supply units with RFID tags. Requests are triggered when the counts drop low at a specified level to make sure you won’t run out of supplies.
- Site monitoring – Contractors place sensors on-site to collect, report and analyze site conditions continuously. This is usually used in vertical construction, and increasingly in horizontal construction, which helps in ensuring safety and compliance by preventing violations and accidents through monitoring.
- Wearable technology – Smart helmets, smart watches, and AR goggles, among others, are used by construction workers to optimize safety and labor tracking. These devices streamline real-time safety alerts, headcount, and mark hazards.
IoT for Humans
Industrial Internet of Things may sound like it is all about the materials in the supply chain. However, there is more to these IoT in supply chain examples. For instance, there are sensors that alert employees to adverse working conditions, too. This way, they can keep themselves safe. This also means that companies can better comply with regulations, among which is a stipulation for a safe working environment.
IoT Leveraging Construction and Supply Chain Management
Technology is quickly progressing. It’s imperative for progressive businesses to adopt IoT in their processes to improve efficiency, productivity, and safety. In the construction industry, IoT delivers improved worker safety, automated workflows, reduced waste, and real-time progress reporting. To maximize the investment of IoT adoption, construction companies should prioritize the areas where they can receive the most immediate impact based on their specific needs.