August 25, 2014 by Josh Noble
While the concept behind the “Internet of Things” has been around for about two decades, NEST, the web-enabled thermostat company recently purchased by Google, has popularized the concept. Today, a data-driven infrastructure of internet-connected devices that control utilities, guide our retail shopping experiences, and monitor our health is far from science fiction.
For mid-market businesses focused on manufacturing, distribution, or logistics, a network of low-cost sensors, two-way controllers, and machine-to-machine networks (M2M) can add new competitive advantages across the supply chain.
The Internet of Things (IoT) and Cloud of Things (CoT) are very broad terms encompassing the web of embedded devices that communicate within a network or across the internet. These devices, or smart objects, include a variety of sensory devices (GPS trackers, switches, temperature probes, cameras, etc.) and actuating devices (valves, bulbs, locks, etc.) that communicate via low power radios, WiFi, and cellular. Interconnected devices can share the gathered sensory data, and then trigger a variety of responses ranging from something as simple as an email alert to real-world actions such as automatically closing safety valves.
Smart devices do not necessarily need a direct internet connection to function. Low power radio devices, such as those using ZigBee or 6LoWPAN protocols, can transmit data through a mesh network of intermediate devices, where data makes short jumps through the hive instead of relying on big antennas and centralized router. These mesh networks allow for smaller transmitters that draw less power, increasing the potential for integration into packaging, pallets, and machines. In fact, some devices are so efficient that they run on ambient energy, and do not require any other power source.
The lack of big antennas or a centralized router, and the low-to-no power requirements, reduces the need for costly infrastructure renovations. Unlike expensive environmental monitoring and automation systems of the past that required enterprise-level investment, the decreasing cost of network-connected devices offers new opportunity for mid-market companies to reduce the risk of worksite accidents or spills, spend on equipment maintenance, repair and overhaul (MRO), and time manually collecting and analyzing operational data.
For example, adding RFID tags to all inventory may be cost prohibitive for mid-market companies. Now, a network of proximity or weight sensors can be installed on warehouse or truck shelving, instead of packaging, to provide far more detailed information than RFIDs alone. Inexpensive sensors that feed a real-time supply chain network can be as simple as a garage door safety laser.
Utilizing mesh network devices, as opposed to bulky or hard-wired alternatives, allows mid-market companies retain their competitive advantage to quickly adjust to changes in market conditions. Facilities can be rearranged with far less effort to support manufacturing of new products. Remote updates can be pulled from 3PLs in real-time, eliminating a common hesitation to outsource distribution. A cross-section of insights including retail customer movements and shopping cart contents can even be compared to purchase history and social media profiles for deep market analysis.
Although this seems like spy fiction, notice the array of sensors above your head the next time you visit a Kroger grocery store. While some protocols such as ZigBee, the alliance standards used at Kroger, require significant licensing costs for commercial use; others such as 6LoWPAN can be programed on Linux-based systems without a license which greatly reduces barriers to entry.
Here are a few ways IoT and CoT solutions can be implemented across the manufacturing and supply network to improve visibility, efficiency, quality, and safety.
Production facilities can integrate a network of sensors into machinery to improve quality of service, increase up-times, and reduce the costs of operation. Photographic instruments can scan disposable machine components, such as blades, and provide alerts for predictive maintenance. Similar scanners can also check raw materials for traits such as paint color, alloy strength, or fabric composition to confirm accuracy before they are used for a finished product. This data can be automatically uploaded to ERPs to provide an audit trail if necessary.
Network-enabled sensors can be used in warehouses and vehicles to monitor temperature, humidity, unusual motion, salinity, and spills. In cold chain management, for example, individual sensors that monitor power, temperature, or motion can provide remote alerts for basic problems such as a temperature drop or an overworked compressor.
When integrated into a network that analyzes data from multiple sensors, real-time intelligence can be crunched to identify the difference between a malfunctioning refrigeration component and a freezer door that has been left open. Real-time collaboration between devices can indicate when to call for repairs, what temperature to keep a warehouse for a lower energy bill, and when to run machines for optimal lifespan.
From supplier to customer, sensors either applied to pallets/packages/individual components, or more broadly at the warehouse or truck level, can offer deep visibility across the entire supply chain and feed real-time location and stock-level data to inventory managers, order pickers, and vendors.
At companies where inventory volumes don’t merit frequent inventory counts, or in locations where information sensitivity prohibits on-site vendor visits, vendor managed inventory may not have been an option to-date. However, with the removal of physical barriers through stock shelves that update remote systems, new replenishment models are far more realistic.
For example, American Apparel originally set out to automate their in-store manual cycle counting process, but ended up eliminating the process all together by creatively using RFID technology. With ceiling mounted RFID readers, they could track in-store merchandise without the need for staff to count individual pieces. This reduced manual input error and allowed more time for retail associates to focus on selling.
At the warehouse, scales and visual sensors can alert workers to inventory levels on shelves, fill levels inside tanks, and unused paper or metal on spools. Instead of relying on bar codes and human error at shipping and receiving, a sensor network can weigh and scan inbound and outbound packages for accuracy. Deviations in weight, size, density, and a variety of other parameters can immediately notify dock works to problems. Based on this data collection, shipping collaboration solutions can match expected vs. actual received inventory against POs, ASNs, and Invoices to ensure accuracy and generate GRNs.
This detailed information holds the potential for manufacturing and distribution companies to rethink how procurement operates. Unlocking a real-time snapshot of stock levels in transit, on retail shelves, 3PL distribution centers, and on-hand in warehouses, allows Inventory Planners, Production Managers, and Procurement Officers to make more informed decisions about materials to hold, build, or buy. When combined procurement automation solutions, mid-market companies can receive advanced warning to shipping errors, while reducing data-entry errors and cycle time.
For a broader view on forecasting and your supply chain, see our webinar, Manage Demand Volatility and Shortened Customer Lead Times
Only 10% of industrial operations are currently utilizing the internet-connected enterprise, according to John Nesi, VP of Market Development at Rockwell Automation, in Forbes. While mid-market companies strive to cut all inefficiencies out of their operations, extend the life of assets, and maximize market insights, those that take advantage of the IoT equalizer can increase competitive advantage against competitors of all sizes.
Mid-market companies have no excuse for complacency, as full infrastructure is not necessary for pilot tests. Solutions range from do-it-yourself (DIY) kits such as the popular (and cheap!) Xbee modules, to more expensive hardened professional development kits from Texas Instruments. This not only means that companies can test fully certified solutions at minimal cost (less than $100 for many full kits), but junior tinkerers are driving down the cost of programming talent.
Greater supply chain visibility via an IoT network can help mid-market companies cut down on lost margins throughout the supply chain (Avoiding Hidden Margin Erosion in Mid-Market Supply Chain Operations), and prepare for expansion (Fine-Tuning the Supply Chain for Market Expansion) which are both critical to mid-market success.
Undoubtedly, the Internet of Things offers one of the most disruptive technologies of the decade that both distribution and manufacturing companies need to evaluate for competitive advantage.