The internet of things and big data are becoming industry buzz words, but how are they linked and what can they do for your operations? Maria Highland reports.
The internet of things and big data are inexorably linked. Incorporating IoT and into supply chain and logistics operations enables vast amounts data to be collected and reported back to the supply chain management system. The amount of data collected creates what we call big data, which can then be analysed to provide insights into how supply chain operations can be improved. “The internet of things promises untold rewards for logistics providers who use data from connected objects to generate insights to drive change and devise new solutions,” says DHL accelerated digitalisation lead Simon Woodward. IoT has “created the environment necessary for the creation of big data, allowing previously unrecorded data to be collected in unprecedented volumes from a myriad of touch points,” says Onecom head of corporate sales Andrew Radovanovic. “Big data has enormous implications for supply chain management,” he adds. It “is not just about gathering and processing more information, it provides the opportunity to innovate, automate and, using analysed data, for enhanced decision-making.” IoT presents supply chains with the opportunity increase efficiency and optimise performance of operations. It “brings together the material and digital worlds, enabling businesses to automatically harvest product and customer data at a granular level, providing the opportunity to achieve a depth of insight like never before,” says Radovanovic. Big data then enables this information to be analysed to identify areas for improvements and to make better decisions. “Information collected by IoT sensors is helping businesses get a better understanding of the journey and usage of their goods,” says Woodward. “Big data can [then]reveal what stock is required, how much and where to meet demand. This insight can also help ensure resources are allocated in the right way.” This is particularly useful for retailers that are continuously managing stock across multiple channels and catering to consumer demand for constant parcel updates. “A loyal customer base is the lifeblood of any company, so being able to provide the services they want, like delivery notifications and tracking, is essential,” says BluJay Solutions SVP EMEA Mohit Paul, making harnessing the power of big data vital to supply chain operations. “Increasingly, consumers want to know where their goods come from and under what circumstances. They demand to know if the item is in stock, or if not, when it can be delivered. They are concerned about the integrity of products,” agrees Entopy chief Toby Mills. “The more detail the consumer can be given about availability and condition within the supply chain the more reassured and confident they are about making a purchase.” IoT of things can provide this immediacy by providing visibility, control and accurate information. Detego chief technology officer Michael Goller explains that the “average retailer’s data is only about seventy-five per cent accurate when it comes to knowing exactly what inventory is actually in stock at any particular time.” But, Goller counters that “thanks to tiny RFID tags attached to every item and the real-time monitoring of articles from warehouse to store using connected devices, Detego projects have shown high article availability and near hundred per cent inventory accuracy when using IoT technology.” With big data improving visibility and reducing friction across supply chains, logistics providers can build better relationships with their customers by providing them with up to date and accurate delivery information. “By strengthening its supply chain, manufacturers and service providers can deliver products and services a consumer wants more quickly, more efficiently and, most importantly, when required,” says Radovanovic. “Companies that demonstrate such value to consumers can increase repeat purchase behaviour, deepen consumer brand loyalty, and derive more value (purchases and referrals) from the customer lifetime.” IoT and big data can also help retailers to stay on top of consumer demands by providing insight into consumer behaviour. “By using big data, retailers and manufacturers can predict what a customer might want ahead of time. This means that logistics companies and retailers working together will be able to meet customer demand with better efficiency than ever before, giving them a competitive edge,” explains Woodward. However, to cater to the needs of the consumer, supply chain operation need to first be optimised to tackle growing consumer demand and increase profit margins. “IoT and big data enhance operations by helping logistics managers make supply chains more efficient while lowering costs and delivering added-value services to customers. Many of these benefits are the result of increased visibility and traceability across the supply chain,” says Paul. “The IoT in supply chains opens a new realm of opportunities from an operational perspective,” says Woodward. “It helps businesses understand where inventory sits in the supply chain – particularly when it’s not in a warehouse – such as its condition and temperature,” which enables companies “to undertake more granular planning, procurement and production, and consider how to deliver more segmented supply chain solutions.” Correspondingly, Mills notes that “supply chains that chatter, or communicate, can have huge, hitherto unseen benefits through delivering total supply chain visibility.” Indeed, IoT enables an operator to have full visibility of where goods are as they pass through the supply chain at intermittent points of verification, such as dispatch or receiving, using bar-code technology or RFID tags. This gives an updated real-time view of the supply chain which can be monitored remotely, and any mishaps or delays in the supply chain can then be easily identified and instructed to change their operational behaviours, all from a remote location. For example, “an international shipment can involve more than 200 interactions, and more than 25 actors from freight-forwarders and port handling, to customs,” suggests Sigfox CTO Raoul Mallart. “As a result, it’s increasingly difficult for shippers to get real-time insights into shipments. Among the biggest challenges facing the supply chain today is knowing the precise routing duration and the associated estimated time of arrival of goods, and how this will affect elements such as safety and quality of transit stock. Above all a sizable amount of money is lost when goods are transported in inappropriate conditions.” He explains that by implementing IoT via a network of small, battery-powered smart tracking devices at every point of the supply chain, stakeholders can be notified in real time on the conditions and location of transported goods. “A logistics manager will also have up-to-the minute information about the exact location of a shipment, as well as an ETA on its arrival, with automated time and date stamps, eradicating the need for low added value tasks such as manual reporting.” Likewise, another advantage of “connected devices is that with the right analytics tools, it can be very easy to spot trends,” says Paul. “Rather than address only isolated bottlenecks and holdups, a system with access to big data can apply a new method of operation to smooth out similar issues across multiple routes and regions.” This helps to enhance operations, making them more efficient and avoiding additional costs. “Smart logistics also allow companies to constantly evaluate and improve their supply chain with an unprecedented level of accuracy,” adds Mallart. “With a wealth of information from the many connected devices, including routes taken, warehouse delays and network gaps acting as an audit trail, companies are empowered to address inefficiencies in their supply chains to ultimately eradicate them all together.” Having full visibility, able to predict and correct potential supply chain issues and better catering to a customer base sounds like an all-round win, but what do you need to consider before implementing IoT into your operations? Maciej Kranz, VP strategic innovation at Cisco Systems, notes that many companies do not know where to first begin when embarking on their first IoT initiatives. Likewise, research “shows that as many as 60 per cent of IoT initiatives stall at the proof of concept stage and only 26 per cent of companies have an IoT initiative that they considered a complete success,” says Kranz. He attributes this to companies not adequately planning out their IoT initiatives before diving in. He urges organisations to “honestly assess their readiness and carefully consider their IoT use case and path” before embarking on an IoT initiative. “They should determine where the greatest IoT opportunity lies and what is their fastest path to ROI. Think big, start small, and build on your successes.” Likewise, Radovanovic explains that “integrating big data into any organisation’s supply chain is destined to be a complex and convoluted exercise.” He advises to “start with individual links within the supply chain – such as departments, build big data into their operations, and replicate their successes across the operation. The buy-in achieved using this approach will help managers mitigate internal resistance to an innovation many find overwhelming.” Paul believes that it is “important to scope out the size and complexity of your existing supply chain. Implementing big data into your logistics operations should make things more efficient, so it is important to consider how the tech will fit into your existing infrastructure and other operational systems.” It is also important to get a solution that both answers your current needs. Mallart notes that when looking to implement an IoT solution, “delivering on the business application should be the guiding principal”.
This feature first appeared in the September issue of Logistics Manager.