Everyone talks about the Internet of Things, or IoT. But what is it and how does tracking shipments with IoT benefits your supply chain?
The first IoT device is considered to be a toaster. In 1990, John Romkey showed a toaster at the INTEROP internet conference in San Jose, California, that could be turned on and off over the internet. With the first prototype, the bread still had to be put into the toaster by human hands. At the conference the following year, a robotic arm was added, and a fully automated system created.
The term “Internet of Things” was coined by Kevin Ashton in 1999. He co-founded the Auto-ID Center at MIT, which created a global standard system for RFID. While working at Procter & Gamble before joining Auto-ID Center, he gave a presentation with the title “Internet of Things” to link the new idea of RFID in Procter & Gamble’s supply chain to the topic of the internet.
Although the term “Internet of Things” has been around for close to 20 years, it has only gained traction in the last few years. Gartner Inc., the global research & advisory firm, defines IoT as “the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment”. It’s about connecting all sorts of devices over the internet, and letting these devices talk to us, to each other, and to different computer applications.
Some of the drivers behind the recent growth of the IoT are the development of more sophisticated, less expensive sensors, the advancement of high-speed networking technologies, the increased usage of cloud computing, and the evolution of smartphones and other connected devices.
IoT in Logistics
In logistics and supply chain, IoT can be used to monitor the status of assets, shipments, and people in real time throughout the value chain. IoT helps to measure how assets are performing and initiates change in what the assets are currently doing or will do next. Business processes can be automated and the interaction between people, systems, and assets can be optimized and better coordinated. With all the data from IoT, more sophisticated analytics can be applied throughout the entire value chain to identify improvement opportunities and best practices.
In the world of logistics, IoT both enables the monitoring of assets throughout the supply chain and turns all the data from monitoring these assets into insights that drive new solutions.
IoT to track shipments
Let’s look in more detail at how shipments can be monitored and tracked with the help of IoT. Barcode labels and RFID were some of the early tools to track shipments, albeit without providing real-time and remote monitoring capabilities. And even when connecting RFID chips to computer systems, the data still needs to be shared with monitoring and enterprise systems.
Next came innovation and dropping prices in cellular and satellite technology that enabled the widespread use of GPS to provide location data in real-time. Other key factors influencing the growth of IoT to track shipments are advances in battery size and lifespan as well as in sensor technology.
Finally, the ubiquitous presence of the internet, cheaper cloud storage, better wireless and cellular networks, improvement in GPS accuracy and reliability, and advancement in data analytics, machine learning and AI, have accelerated innovation in and adoption of IoT to track shipments.
IoT allows the monitoring of the movement of a pallet in a warehouse, the entire journey of a container from a factory in Asia to a warehouse in the United States, or a parcel from a distribution center of an eCommerce company to the residential address of their customer. In addition to tracking the location of a shipment, IoT solutions can also monitor temperature, humidity, shock, orientation of a package, or if a door of a container has been opened, and alert the user in case of a non-conformity.
What IoT technologies are available
In broad terms, IoT solutions are built around hardware, connectivity and software technology. To connect sensors to the internet, IoT encompasses a diverse array of different technologies, like local wireless technology (i.e. RFID, Wi-Fi, and Bluetooth), mesh networks, cellular technologies (i.e. LTE, 3G, 4G and soon 5G), satellite networks, and wired connections.
Sensors and tags have become more sophisticated in recent years, providing the ability to monitor a multitude of parameters, like location, temperature, humidity, orientation, light exposure, and others. Near-field communication (NFC) is another technology that has seen rapid deployment. The Norwegian tech company Thinfilm, for example, developed a technology to print tiny electronics chips on plastic surfaces, creating smart labels that can be connected with IoT solutions.
Satellite tracking systems generate close to real-time, location-based data, covering up to 98 percent of the main trade routes around the world. Some of the devices using satellite tracking technology allow bi-directional communication. In one direction, satellites track remote assets, but they also allow companies to communicate directly with the devices. Cellular tracking systems also provide near real-time data and are much cheaper than satellite systems, but don’t have the same range of coverage.
There have been tracking solutions in place for several years, but many of these solutions are proprietary, stand-alone solutions that are not connected to each other. With the emergence of IoT, new open platforms have been launched that combine various existing software and hardware solutions and enable end-to-end monitoring of the supply chain.
For what type of industries and products does it make sense to use IoT?
Tracking shipments with IoT technology doesn’t necessarily make sense for all industries and products. And not every IoT solution is equally well suited for every product. Logistics and transportation companies have always been at the forefront to invest in the newest tracking technologies and offer solutions to their customers. They are therefore embracing the advancements in IoT technology.
Besides logistics and transportation companies, industries like pharmaceutical, cosmetics, automotive, aeronautics, and food & beverage, are other early adopters of the newest developments in IoT. Key applications include monitoring high-value, fragile, and time- or temperature-sensitive products.
Benefits of IoT
All these global, real-time tracking and monitoring solutions can drive improvements in your supply chain and provide a competitive advantage. It gives the shipper, receiver and, where necessary, 3rd parties, a new visibility to the location and condition of the shipment and allows better coordination of facilities, assets, labor, and communication.
Companies can react faster when problems occur and, in some instances, even intervene while the shipment is still in-transit. If the temperature of a refrigerated truck is incorrectly set, the shipper will get an alert if the shipment reaches a pre-set temperature range and can notify the trucking company to reset the truck to the correct temperature.
Tracking and monitoring data can enable root cause analysis into re-occurring problems and provide insights into when and where there was an issue in the supply chain. For instance, if containers always get delayed in the same port, the company can re-route future container shipments or use a different shipping company that operates in a different terminal in the port.
IoT solutions give companies access to a variety of data sources and make it possible to apply big data analytics and use tools like six sigma or lean management to optimize the supply chain.
Challenges of IoT
Despite the growth of IoT, it is still a challenge to cover an entire end-to-end supply chain across all involved parties and platforms. It is therefore important to create an intelligent network of IoT devices that connect to different verticals and horizontals across the supply chain.
Gartner Inc. forecasts that by 2020 more than 20 billion “connected things” will be in use worldwide. Despite all the advancements in faster and better networks, it’s just a matter of time until IoT connectivity will face efficiency and performance challenges.
Besides connectivity, keeping IoT devices updated is another challenge. As with other sensors and electronic hardware, the IoT devices must be calibrated and the software updated on a regular basis.
Connecting more and more IoT devices to the internet will open the doors for new security vulnerabilities. Hackers and cyber criminals may be able to access networks and systems of companies through IoT devices.
Another topic that needs to be addressed is the concern about the privacy and control of personal information. Like privacy, there are a number of legal and regulatory questions that surround the Internet of Things. There is a need for clear guidelines on the retention, use, and security of the data, including metadata.
Internet of Things solutions to monitor shipments in real-time and across the entire supply chain offer immense opportunities and benefits. The technology, available solutions, and the potential of IoT is advancing at a fast pace. The array of available tracking solutions can be daunting and, despite falling prices, it can still involve a significant investment. Before exploring IoT technology and options, a company needs to define first the business need and specific goals. Just because the technology is available to monitor a shipment via satellite in real-time 24/7 around the globe while tracking multiple parameters, it still has to make business sense and cater to the specific company and product requirements. For some companies, a combination of bar codes and IoT RFID devices that record data once a day might be sufficient. It also helps to start small and to implement IoT tracking devices only in a portion of the supply chain, gain experience, and expand from there.
Another consideration is to invest in own technology and purchase all the equipment versus partner with a solutions provider. There are more and more companies on the market that offer tailored solutions as a service and provide all required hardware, software, and connectivity technology to monitor shipments for a service fee.
Internet of Things is still only in its early stages and will see more evolutions in the future. But already many solutions offer greater supply chain visibility and big data from the IoT devices can help to optimize the supply network.
About the Author
Rene Jacquat is the principal of LogiChain Solutions, LLC, based in San Francisco, United States. His experience includes operations, supply chain management and logistics in the consumer goods industry. Rene supports food & beverage companies in supply chain strategy, supply chain & distribution network design, supply chain diagnostics & risk management, sustainability and outsourcing logistics services.