New IoT Tools Enable Greater Visibility Into Complex Supply Chains
Shipping high-value goods is risky business. Supply chains are complex, and getting more complex by the day. More complexity means more surprises, and most supply chain managers don’t like surprises.
Every year, pharmaceutical companies spend $30 billion replacing shipments that have been damaged due to temperature excursions. Cargo loss in other industries accounts for an additional $50 billion in losses due to physical damage, temperature damage, and other problems.
In theory, visibility tools remove some of the risk in a complicated supply chain, but in reality most of these tools are focused on “inside the building” visibility: quantity on hand, lead times, and so on. They don’t tell shippers much about what is happening in transit, which is where most things go wrong. Cargo stuck in customs, trucks delayed by weather, items damaged by rough handling—more often than not, logistics professionals find out about these surprises too late to help.
It's Getting Real
Fortunately, new sensor-driven visibility tools are giving managers new insight into what happens during shipment. While the idea of tracking inventory in transit is nothing new, expanding cellular networks, improved battery technology, and advances in cloud computing are enabling low-cost, long-lasting, globally connected trackers that make real-time supply chain visibility possible.
In fact, many companies are already using these tracking technologies to improve customer service, reduce manufacturing disruptions, and lower logistics costs by avoiding inventory delays or damage. Avoiding delays means being able to see where the shipment is, and getting an alert if it’s going to be late.
In a lean supply chain, one day of warning can mean the difference between shutting down an assembly plant and simply running a different product while waiting for key parts to arrive, so these alerts can result in huge cost savings and waste reductions.
While everyone wants to avoid delays, avoiding inventory damage means different things for different products. For pharmaceutical companies, it means monitoring the temperature of products as they travel in refrigerated containers or sit on a hot tarmac waiting to be loaded. An alert when the temperature starts to climb can lead to a quick phone call to the carrier to resolve the problem, or at worst, allow the manufacturer to identify when and where the temperature excursion happened and prevent a reoccurrence.
Other industries have different concerns. An electronics company may be worried about server racks being tilted past a certain point, while a chemical company may need to avoid vibrations that could crystallize expensive materials.
An industrial equipment manufacturer knows that a certain level of humidity leads to corrosion, whereas an automotive OEM needs to determine why one local supplier has higher damage rates than another. The list is endless, but the common theme is visibility—these companies want to know what’s going on, in real time, and they are looking to a new generation of trackers, with accelerometers, moisture sensors, thermocouples, and other sensors, to provide the awareness they need.
Beyond Phase 1
But this real-time awareness is just the beginning. Knowing what’s going on with an individual shipment is the first step along the path to a fully IoT-integrated supply chain. The second step is analysis: Once shippers have awareness into the “black holes” of their supply chains, they can begin to connect the dots and analyze their entire supply chains, from start to finish. This leads to the third step in the evolution of supply chain visibility: predictive analytics that enable optimization of the entire supply chain operation, with problems predicted and eliminated before they occur.
It will be some time before these analytical and predictive tools are fully developed, but the first phase is already well underway. Companies are already starting to use IoT tracking technologies to manage the increasing complexity of their supply chains. As technology continues to improve and IoT applications become more widespread, logistics managers will have new tools to improve their operations and retain control in an increasingly complex world.