Friday, February 26, 2016

Ruminating on IoT revolutionizing the supply chain

Smart sensors (IoT) are pushing the frontiers of supply chain technology. By utilizing sophisticated sensors, Logistics Providers can enable greater visibility into their supply chains.

Smart sensors today can measure a variety of environmental variables such as GPS coordinates, temperature, light sensitivity, humidity, pressure, and shock events. These sensors then wirelessly transmit the data to the enterprise systems in real-time. For e.g. SenseAware provides smart sensors that can be dropped into any package and enable tracking of all these environmental variables throughout the shipment journey. Roambee provides intelligent sensors called 'bees' to monitor shipments.

Given below are some of the business use-cases where smart sensors can add value to the supply chain.

  1. Cold Chain: A lot of shipments need tight temperature controls during the entire journey - e.g. bio-medicines, insulin, blood, live organs, vaccines, perishable food items, etc. By using temperature sensors, organizations can monitor the temperature excursions and take corrective action like re-icing the shipment, etc. 
  2. Improve security of high-value products: By utilizing sensors, we can now track the location of each shipment in real-time and raise alerts if a shipment has deviated from its planned route. Most sensor-based platforms enable users to define geofences and trigger alerts if the shipment is moved outside of the geofence. This can be very useful for high-value products such as gems, jewelry, surgical items, etc. 
  3. Enable faster cash collection: In many industries, suppliers are unable to invoice their customers till they get confirmation of the shipment delivery. By leveraging 'light sensors', suppliers can be notified that their shipment has been opened and hence considered to be delivered. This would enable suppliers to raise quicker invoices and thus faster cash collections. 
  4. Reduce buffer inventory: Many manufacturing units maintain buffer inventory to avoid stock-out situations. Lack of information on inbound logistics (delivery dates) results in higher buffer inventory. By leveraging smart sensor-based logistics, manufacturing firms would have greater visibility into inbound goods delivery as they can track the location of shipments in real-time. This can result in tighter inventory controls and lower TCO. 
  5. Reduce insurance premiums: Over a period of time, all the data collected by sensors can be utilized by an insurance firm to reduce the premiums for customers who take tangible steps to ensure the safety and quality of the delivered goods. For e.g. If Pharma company A is doing a better job at maintaining tight temperature controls than Pharma company B, then it makes sense for the insurer to incentivize Pharma company A. 
  6. Avoid delivery penalties: Large retailers such as Walmart have stringent rules on shipment delivery times. It imposes a penalty if a shipment arrives earlier or later than its scheduled time-slot. By leveraging smart logistics, vendors can monitor their shipment delivery times and take corrective action. 

Thus, smart sensor-based logistics can provide business value across a range of industries. The combination of smart hardware sensors and scalable software platforms can help organizations build a new central nervous system for their supply chain.