The supply chain may be going global, but for many companies, it remains more opaque than ever. Enter: the Internet of Things. The potential for IoT technology in supply chain management can be massive, says Haley Garner, head of research at eft.
Short for Eye For Transport, U.K.-based eft provides logistics and supply chain solutions for companies that are increasingly challenged to manage their suppliers and materials across borders. Eft has just published new research on the role IoT currently plays in this effort.
Supply chain decision-makers across logistics and manufacturing companies offered their insight into how the Internet of Things is shaping the future of their industries. At present, eft found, 41 percent of supply chain management officials already have some form of an IoT solution in place, while an additional 23 percent said they plan to use IoT technology sometime in the future.
Further, a vast majority (87 percent) said they plan to expand their use of IoT.
Researchers pinpointed where these players want their IoT solutions to bring transparency and efficiency to their operations. Above all, the ability to track the location of materials in the supply chain is their top demand. But security and prevention of theft of those materials, the temperature in which those materials are stored while in transit and the speed with which those materials travel are also at the top of their lists.
Garner told PYMNTS, though, that the potential for IoT in the supply chain can go much further.
Mitigating supplier risk, for instance.
"Fundamentally, IoT is allowing businesses to collect significantly more external and internal data and integrate it into their risk assessment analytics," he explained. "Companies with effective risk mitigation strategies are generally incorporating more data streams into their risk plans, allowing them to make calculated decisions more effectively."
That could be huge, considering the U.S. National Counterintelligence and Security Center has just revamped efforts to increase the sharing of data to corporations for the purpose of protecting supply chains and mitigating supplier risk.
Eft also identified other metrics, like humidity levels, shock and vibration, pressure on materials and other sets of information, that, without IoT technology, may be considered minuscule data points inaccessible to the supply chain or logistics manager.
The ability to understand how much light materials are exposed to or how much they're moving while in transit may seem trivial, but Garner explained that all of these details impact the bottom lines for these firms.
For one, he said, data from IoT provides a competitive advantage.
"Businesses functioning in these spaces are increasingly aware that having more data and the right analytics can be a serious competitive advantage," Garner said. "IoT is providing companies adopting the technology with significantly more data that can be used for more accurate forecasting, risks mitigation, predictions and efficiencies."
Research published last year by DHL and Cisco forecasted that IoT-connected supply chains could lead to $1.9 trillion in profits due to lower costs and increased revenues for companies that deploy the technology.
He added that automation is also key for supply chain firms to remain competitive in today's market, from manufacturing to warehousing.
"There are a number of technologies under the IoT umbrella that are allowing machines to act autonomously, which has a huge potential for making the supply chain faster, more efficient and more agile," he said.
But the Internet of Things is quite far from reaching its full potential to impact the supply chain space, added Garner.
For instance, when it comes to mitigating supplier risk, IoT can only go so far because the technology is not yet implemented at all points within the supply chain. Measuring metrics, like temperature and movement, he said, is "only the beginning potential of the technology, with autonomy playing a huge role in the space in the future."
Analysis from eft did find that companies are eager to increase their use of IoT technology in new areas.
Improving customer service with better information was picked as the top demand for companies that plan to enhance IoT technologies in their supply chain management, followed by gaining increased visibility on additional supply chain variables.
Safety and regulatory compliance also ranked high on their list of most important reasons why they'd like to boost investment in supply chain IoT.
And these firms also already know where that investment will fall. Most said they'd increase their IoT sensor and monitoring technologies, followed by GPS or satellite tracking, and RFID technology (which uses radio waves to capture data about an object to which an RFID tag is attached).
The data is promising, but Garner said there are some challenges to businesses actually putting their money where their mouth is.
"I think that there are may businesses that do not understand the power of IoT," stated Garner. He pointed to the reluctance to place resources to use IoT technology. For instance, many businesses aren't willing to invest in RFID technology because it's more expensive than barcodes.
But there may be another reason IoT adoption in the supply chain has been slow.
"I don't think that IoT organizations have done a great job with framing the value in the technology, especially for nontechnical decision-makers in the business," he said. "Because IoT requires solid strategic planning to ensure ROI, companies struggling with data strategies — of which there are many in the industry — aren't going to be keen to add even more data to the mix."
The pain of investing in technology and the threat of overwhelming data may not be too appealing to supply chain companies. But IoT technology is advancing at a fast pace, said Garner, and eventually, it will gain traction.
"It's been a long process, but increasingly, [supply chain and logistics businesses] are hiring data scientists and developers, they are spending money on innovation and technology and they are incorporating data into business strategies," he stated. "As early adopters prove ROI from IoT and as supply chain and logistics companies become more technologically advanced, adoption will increase."