08.04.2016  |  Branchenyt

The Internet of Things will transform Logistics

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The ‘Internet of Things’ has moved beyond the hype and is rapidly becoming a reality, with potentially profound effects for the logistics industry and its customers.

Although the popular image is based on domestic situations such as the smart fridge which reorders the groceries, in practice most Internet of Things (IoT) applications and benefits will be seen in industry and commerce.

IoT isn’t just the further extension of existing technologies like RFID tagging and GPS positioning. Anything can be a ‘thing’ in IoT: not just discrete items and packages, but also locations, machines, automated systems, software routines and even, through ‘wearable’ devices, humans. All these are internet-addressable and can talk to, update and negotiate with each other with a high degree of autonomy. Hundreds of billions of devices, and almost unimaginable quantities of data, are involved, transforming the ways in which human needs and business objectives are met. Logistics and supply chain operations will be at the centre of this

No flight of fancy

An example of what is possible is in the maintenance and support of aero-engines. These already carry a multiplicity of sensors. IoT-connected, their condition can be monitored continuously and the system can use the data to schedule maintenance at an appropriate location, automatically directing the availability of parts and labour, and co-ordinating timetable changes or substitute aircraft. On the ground, your motor car could monitor its condition and book itself in to an appropriate service centre (after evaluating quotations), pre-ordering parts and labour and the courtesy car, and co-ordinating this with the driver’s diary.

More generally, a demand is raised, perhaps by an IoT device flagging a maintenance issue, or indeed by the smart fridge. This can generate a manufacturing or replenishment instruction, which raises materials orders, labour requirements and machine time. Depending on the level of automation, other IoT-enabled devices are instructed to pick, pack and dispatch. The same network of IoT devices can expand to book transport and arrange delivery, negotiating with IoT enablers at the courier and the destination. This is no longer a sequential process – all these stages can be planned, if not executed, simultaneously.

This does depend on IoT being widely adopted through the supply chain, but it is generally believed that we are already at the ‘tipping point’.

Many supply chain benefits…

The IoT benefits for logistics are not solely or even primarily about replacing people. IoT can offer:

  • Enhanced security, protection against theft and counterfeiting;
  • Improved monitoring of and reaction to safety and condition;
  • Better asset utilisation;
  • Transport optimization (by cost, or time, or environmental impact);
  • Faster response to inventory and warehousing events, including returns;
  • Elimination of most manual data-handling processes, leading to:
  • Extreme accuracy in execution and real-time visibility and response.

…but a few hurdles to overcome

From a technical perspective, there are few barriers to IoT. Although new technologies will doubtless emerge, we already have a vast range of IoT devices. Standards for IoT communications are being developed and, as with most internet applications, the cost of entry in terms of hardware will be relatively low. (Somewhere there is major investment in servers and the like, but not at the level of the individual user).

There are however some potential social barriers.

  • IoT could be seen as a threat to many jobs, particularly clerical and junior management.
  • A bigger issue is cyber-security: in theory every additional internet connection is a potential avenue for the malicious.
  • There will be some need to retain human decision-making and oversight at appropriate points, both to protect against system errors, but also because commercial relationships are about human beings and our needs are not always met by the most logical or efficient process.
  • There are also unanswered questions in the legal sphere about where liability lies when something goes wrong: the system owner, the device or network builder, the software writer, the source of data? Indeed, who actually owns the dataset assembled out of IoT inputs from many sources?

The way ahead

IoT will have, is already having, an impact on existing logistics and supply chain operations. There is ‘low hanging fruit’ to be picked in, for example, more efficient transport scheduling and routing, in better use of assets, in more current demand signals and in greater accuracy of execution.

It also raises the possibility of quite novel forms of supply chain, and of new roles for logistics operators. How these develop will largely depend on the ability of logistics operators and their customers to cope with the huge amounts of data at their disposal and to see the opportunities that this affords.

This blog post is an excerpt of the eGuide ‘How the Internet of Things will change Logistic’.

If you are interested in the full document, you may download your copy from our website.

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