The Internet of Things Is A Supply Chain Game-Changer

The Internet of Things (IoT) is the connection of anything—from street lamps to people—to the Web. A newly released report from DHL and Cisco predicts some 50 billion objects will be connected to the Internet by 2020. In addition to generating actionable data and analytics to help people and business work smarter not harder, the Internet of Things will generate more than $8 trillion worldwide over the next 10 years.

IoT adoption in supply chain and logistics alone could account for nearly 25 percent of the total global value by over the next decade. By not investing in existing technology, the logistics industry could miss out on $1.9 trillion in untapped potential (and profits). The value will come from a combination of lower costs and increased revenues. The report titled “Internet of Things in Logistics” shows the businesses that take IoT seriously will see effects across all aspects of the supply chain including more ‘last mile’ delivery options for customers, more efficient warehousing operations and freight transportation. IoT must be incorporated responsibly. Solutions to security and privacy issues are still unclear. “Active defense” will become even more important as the number of connected devices increases.

Today, less than 1 percent of objects and devices that could be connected to the Internet currently are. The report suggests that is about to change—fast. Since 2012, the number of connected objects jumped more than 300 percent. Soon computers won’t make up the majority of connected devices. PCs, laptops, smartphones and tablets will be just 17 percent of all Internet connections. The new majority will consist of wearables and other smart devices. Improvements in the technology are paving the way. Sensors are now more affordable, cloud computing and big data are becoming more commonplace, and with the proliferation of 5G wireless communication is reaching a new level of maturity ensuring connection is available anytime, anywhere.

A Perfect Match

Every day the logistics industry handles millions of shipments being moved, tracked and stowed. The IoT can help. Crucial to the success of IoT is the ability to capture data and analysis in real time. Networked sensors allow businesses to track how assets are performing, predict future performance and if needed make changes on the fly. Many of the building blocks of IoT—sensors, microprocessors and wireless connections—have been used in the logistics industry for years. The industry may have been an early adopter of IoT technologies. But, the report suggests they have barely scratched the surface of all of the capabilities.

Looking forward, DHL and Cisco imagine the possibilities. In the warehouse, connected pallets and items using RFID technology can talk to each other, prompting smarter inventory management. Without human interaction, supplies can reorder themselves and notify users of surpluses. In transit, tracking and tracing of goods becomes faster, more accurate, predictive and secure. Sensors can notify if an item is incorrectly loaded and give customers real-time updates on delivery status. More than just the inventory being transported, a connected fleet could save time and money by preemptively predicting asset failure and scheduling maintenance checks automatically. Labor intensive and increasingly complicated, the final portion of the delivery journey IoT-enabled practices could revolutionize delivery. One advantage is end-to-end risk management. Systems can automatically check for potential disruptions, whether natural or not, and automatically trigger alterations.

Change is on the horizon, but there is still work to be done. “Bountiful opportunities therefore exist for logistics providers to leverage IoT in their organizations in order to increase productivity, reengineer existing processes and provide new services that challenge traditional business models,” Rob Siegers, President Global Technology at DHL Customer Solutions & Innovation, said of the future of IoT. “However to derive significant commercial value from IoT will ultimately depend on how well connected assets, such as containers or parcels, are networked along the entire supply chain. This of course entails close cooperation and collaboration between all players in the logistics industry.”