1/18/2014 Logistics Business IT® Magazine | Industry Talk - How companies can exploit the Internet of Things

http://www.logisticsbusinessit.com/tech/article.aspx?tid=7&aid=304 1/3

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T he Internet of Things (IoT) has emerged as a keyphrase around the

world this year for conscientious CIOs and executives. A termused to

describe complete machine to machine (M2M) connectivity across the

internet, formerly only evoked thoughts of The Matrix or Terminator films.

However, with a report by Cisco that the IoT market will be worth $14.4

trillion by 2020, it represents a business opportunity that companies should

be taking seriously.

With the technology usable across virtually any industry sector, a report by

McKinsey & Company recently stated that the manufacturing sector is likely

to see the most benefits from the IoT. They went on to predict that we are

about to enter the fourth industrial revolution. The industrial internet will

see the world of manufacturing become more and more networked until

everything is interlinked with everything else.

In light of this, the IoT could add value to supply chain strategies not just in

manufacturing, but in sectors such as retail as well. We are at the very early

stages of understanding how the IoT will impact the enterprise, but from a

supply chain management point of view, here are three initial areas where

the IoT could impact global supply chains:

• Pervasive Visibility – relates to the way in which shipments are tracked at

every stage of their supply chain journey. The IoT not only provides

‘information everywhere,’ but will offer ‘visibility everywhere’ too.

Radio-frequency identification (RFID) is one such technology that was

introduced to provide this improved visibility. However, results have been

mixed, and it has sometimes struggled to offer full end to end visibility

across a supply chain. With the IoT, as more pieces of equipment,

infrastructure and vehicles are connected to the internet, it means that

thesetraditional ‘black spots’ or visibility gaps will begin to disappear.

The IoT will also allow companies to have two way communications with

their shipments at each stage of its journey across the supply chain. For

example, a piece of equipment could be remotely contacted and instructed

to go into an ‘installation mode’ before it is delivered.

• Proactive Replenishment – efficient inventory management has always

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1/18/2014 Logistics Business IT® Magazine | Industry Talk - How companies can exploit the Internet of Things

http://www.logisticsbusinessit.com/tech/article.aspx?tid=7&aid=304 2/3

• Proactive Replenishment – efficient inventory management has always

been a challenge across the retail industry, especially when one considers

the various channels that consumers can purchase goods through today.

Thus, managing inventory levels and being able to replenish stocks

efficiently is a constant challenge. This is not just consigned to retail outlets

however, with ensuring vending machines are stocked up another area that

could be considerably improved. Many of these machines are located in

remote locations, with the only way to monitor stock levels througha

physicalvisit. What if the vending machine could be connected to the IoT?

Then when the vending machine detects low stock, it could automatically

place an order for new stock before it runs out. The same principles could

beexpanded and applied to normal retail outlets, revolutionising the way in

which retail outlets manage their inventory levels.

• Preventative Maintenance – theIoT could support the replacement of

parts in serviceable products, such as industrial and office equipment. If a

piece of equipment is able to self-diagnose a potential problem and then

place an order for a replacement part, it could be fitted before the part fails.

For example, imagine a car engine detecting reduced flow rates across a

water pump. A seal on the water pump could be leaking, causing inefficient

operation of the cooling system. Before the water pump completely fails,

the car would send information via the internet to a local garage, while also

placing an order for a new seal to be delivered directly to the car owner’s

normal location. The garage then automatically checks the service schedule,

booking an appointment and emailing the owner of the car to notify them

ofthe impending issue.

Direct integration with a B2B platform would also allow all orders and

shipment related documents to be created and tracked automatically, so

that service centres know exactly when the replacement parts will be

delivered. Key to all three of these areas however is the ability to integrate

the physical and digital supply chains. Consequently, companies will need

access to a cloud based integration platform that can integrate to a wide

variety of connected devices, equipment and services.

Anothercrucial challenge to ensure widespread adoption of the IoT relates

to developing seamless interoperability and common worldwide standards.

These must not only allow machines to communicate at a technical level,

but alongside across different borders and cultures too.Currently being

discussed across Europe, in China and North America, an alliance of ten

companies from the latter are currently working to lobby the US

government on the importance of developing open standards that will

encourage this adoption. The alliance is aiming to address the following IoT

related issues:

• Co-engineering cyber and physical systems

• Identifying cyber-security issues and solutions

• Addressing concerns about interoperability

• Identifying ways to maintain robust wireless connections

• Setting standards for real-time data collection and analytics

Pervasive, Proactive and Preventative, three words that begin to define the

benefits of the IoT, especially from a supply chain perspective. The IoT will

allow the seamless exchange of information in real time between a

shipment, its surroundings and a common, cloud based, integration

platform that is used to connect all trading partners across the extended

enterprise.

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