IoT enabled SCM Integration Strategy

With the emergence of ubiquitous connectivity coupled with the bundling of sensors – all packaged into what we now call the Internet of Things (IoT) - the writing on the wall is becoming clearer that IoT-SCM integration can deliver rapid tactical outcomes, and it can be leveraged as a strategic capability to drive competitive advantage.Common shortcomings of incumbent supply chain management platforms targeted towards consumer goods and retail sector have been; inadequate attention to real-time location; event; condition and custody data and recognition that supply chain visibility is a foundational capability.

However, over the last couple of years, integration of IoT technologies with incumbent supply chain applications appears to have turned a corner from mere curiosity to an established trend.

While many brand owners, shippers and retailers are still trying to figure out how to make the most out of IoT, actual project size only involves a handful of sites. It’s supply chain visibility which tends to drive an organisation learning curve on IoT adoption.

For example, Walmart has deployed an IoT platform in its cold-chain to detect food spoilage – including all its 5,000 stores, reefers/vans and distribution centres– and integrated sensor data into its supply chain platforms for decision support. It now has more extensive plans to integrate IoT technologies with SCM platforms to optimize operations and improve customer experience.

My experience points at five distinct use case categories where IoT is rapidly scaling up its presence in these sectors:

1. Smart factories and stores: improving performance through digital connectivity and data collection
2. Connected customers: personalised deals, assistance finding products and easy checkout
3. Smart warehouses: easily locating items, reducing damage and increasing efficiency and productivity
4. Predictive maintenance: knowing when a piece of equipment might break down and factoring the insight into supply chain execution decisions
5. Supply chain visibility: driving operational efficiencies and revenue opportunities through ‘extreme transparency’ i.e. making every step from procurement and processing to stocking, trackable and monitorable in real-time.  

However, there are three basic problems with the existing supply chain visibility ‘tool-kit’:

1. Positioned as a pure operations control tool with too much focus on ‘things/devices’ and very little attention to visualisation and monetisation of the underlying dataset
2. Compartmentalised solutions viz. transport tracking/safety (fleet monitors), cargo condition (data loggers), inventory and asset trackers (RFID tags), machine sensors on PLC (SCADA systems)
3. Connected to disparate and clunky platforms with minimal integration capability with SCM systems. 

My recommendation for enterprise-wide IoT strategy and SCM integration in the consumer goods and retail sector is to start with logistics conditions and event visibility (e.g. cold-chain), followed by improving inventory accuracy and management and then get into making transport processes more efficient. All these solutions will help to drive waste out of tactical planning processes, making them robust and reliable thereby improving inventory turnaround and working capital efficiency.

Concurrently, enterprise IT should focus on beefing up API and Cybersecurity strategies and platforms. Once enough confidence is gained with these technologies and integrations it should then be considered for use in more complex processes viz. integrated planning, manufacturing, asset management and customer-facing operations.

Mark Singh is the founder and director of IndusHaze Advisory Limited.