Payoffs for companies that embrace the IoT supply chain

Shared revenue gains and real-time visibility across partner networks are just two of the gains that IoT has the potential to bring to traditional supply chains.

The concept of the IoT supply chain -- along with its real-life application -- is on the verge of irrevocably transforming...

traditional supply chains.

Internet of Things technology, along with other breakthrough innovations, has created new expectations that are gathering force day by day. Indeed, there is a growing demand for data-driven insights and rapid-response processes that have put immense pressure on the supply chain. Add to that the constant competition that companies must face, which in turn requires tighter profit margins. The result is that supply chain executives are forced to focus their efforts on agility, cost reductions and efficiency improvements. In the attempt to achieve their goals, many companies are investing significant man-hours and capital, only to achieve minuscule improvements. Although, today, the ROI on IoT in the supply chain is limited, Jevon's paradox, which simply states that advances in technology will improve efficiency, is finally catching up with the market. The early promise of IoT has become a strategic bet within many organizations to ensure they maintain some level of competitive parity in the future.  

Uniting for greater visibility

Further, advances in the digital economy, big data and IoT put pressure on companies to detect supply chain changes, disruptions and opportunities in real time. Bringing end-to-end visibility into every aspect of the supply chain has become paramount, but evaluating and analyzing the massive amounts of structured and unstructured data can be a daunting task. This is especially true if the supply chain stakeholders -- including retailers, manufacturers, business partners, suppliers and employees -- are on disparate systems, which is often the case. Indeed, an IoT supply chain requires that organizations interact with each other on a common network to enjoy the same increases in revenue-generating opportunities and decreases in cost structures across the supply chain.

The rigid and inflexible strategies of the past have been played out and have little additional life left.

IoT is creating a dramatic change in supply, distribution and logistics. Adoption has been spurred by improvements in sensing, computing and communications technologies, and the dramatic downward trend of inventory-to-sales ratios within global businesses. Companies want to invest in expertise, intelligence and products that move at market speed, create higher inventory turns, mitigate risk, and manage third-party logistics and service providers more efficiently. Businesses are relying more and more on timely, contextually relevant data to achieve return on their investments. With the increase of diverse data points, systems are being developed to move beyond business intelligence to single sources of truth -- or single instances of ERP -- that provide a unified view into all aspects of operational and enterprise systems. 

Driving supply chain improvements through IoT intelligence  

The Internet of Things promises to fundamentally reshape supply chain management. Some estimates say that by 2020 there will be at least 200 billion connected devices collecting a myriad of both structured and unstructured data, while the amount of data is doubling every two years. Where companies once suffered from ignorance about their customers and capabilities, for example, they now have far more potential to gain insight through real-time intelligence and visibility across the enterprise. Where there was once opacity about supply and demand chains, there is now a growing number of products that offer intelligence and transparency. IoT is allowing companies to gain visibility into all aspects of their business using information gathered from myriad sources, including customers, suppliers, distributors, manufacturers, employees and partners. IoT is having a major impact, and the implications expand beyond the supply chain.

Sound decision making and the accompanying risk reduction will enable companies to invest more in their financial and operational capabilities to improve efficiencies.

Smart leaders have realized that big data and analytics have become the priority for today's supply chain. While companies collect increasing amounts of information from digital technologies, they need better ways of making sense of the information and, more importantly, better means of using that information to make informed decisions.

Over the next few years, most companies will face transformational changes in all aspects of their business. As market changes are driving the need for businesses to be more agile and responsive to real-time consumer demands and customization, enterprises are clearly weighing their options for streamlining their supply chain, while stakeholders and partners are putting pressure on the value chain. The rigid and inflexible strategies of the past have been played out and have little additional life left. It is important for companies to consider new information strategies and approaches that can help align and manage manufacturing resources with the new technologies of today. For example, using multidimensional data to make better decisions is becoming more important, and machine learning is playing a bigger role in information strategies.

Bottom line: Tremendous changes are happening now and more are afoot. The time to take a look at your IoT supply chain strategy is now.

Next Steps

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This was first published in March 2016

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