How smart sensors and the IoT will evolve supply chains

The world we live in is full of machine to machine (M2M) communication, some are visible, like our Fitbit, Nest or EZ-Pass and others operate behind the scenes. Pharmaceutical and consumer goods companies use ‘Internet of Things’ (IoT) and sensors to track and secure expensive shipments, manufacturers to detect when maintenance is needed on equipment, and hospitals employ sensors to monitor staff handwashing compliance to reduce infection rates. 

Supply Chain Digitization Trends 

Supply chain digitization is expanding, and with it, sensor technology adoption is growing. Deloitte and MHI’s 2017 survey of 900 supply chain industry leaders, identified sensors as one technology enabling today’s “always-on supply chain” — where supply networks continuously share information and analytics. According to this report, 43% of companies use sensor technology. Typical use cases include tracking in-transit cargo location, monitoring carrier performance, identifying areas prone to theft or tampering and monitoring shipment temperature, shock and vibration. This growing reliance on sensors is evident — 83% of survey respondents said they believe technologies such as sensors, robotics, and inventory optimization tools offer a competitive advantage for organizations.   

The Value of IoT and Sensors for Businesses 

Wireless sensors offer a significant return on investment for medium to enterprise-sized businesses looking to increase efficiency, responsiveness and reduce business interruption. The IoT uses telematics, sensors and geo-positioning signals from devices to pinpoint location and condition of assets.   

Pharmaceutical and life sciences companies use sensors to monitor the cold chain in real-time to ensure high value time-and-temperature-sensitive goods stay within safe ranges. Tamper proof sensors are deployed across a range of industries on pallets and trucks to reduce theft. IoT and sensor data feed supply chain management (SCM) software and analytics solutions which makes point-in-time information much more useful.   

However, even more of the value of IoT and smart sensors will come from using that awareness from all the data received to make better decisions. Real-time feedback and analytics can identify trends and deliver insights to supply chain managers to drive improvements and reduce disruptions such as missed handoffs, cold chain exceptions or theft. In turn, data-driven insights facilitate more informed scenario-based contingency planning.    

In-transit visibility software paired with sensors and analytics can identify if a refrigerated shipment will exceed a threshold temperature.  This platform could determine when the shipment will go bad, and scenario-based planning logic could pinpoint where an alternate shipment could be sent from to avoid a supply chain disruption. Adopting these tools allow supply chain leaders to be significantly more agile, avoiding customer dissatisfaction, and avoiding or mitigating significant revenue losses. 

Strategies for Overcoming Adoption Challenges   

While the benefits of sensors and the data they generate may be clear, there are still some barriers to broader adoption of the technology.    

Many see deploying sensors as a part of risk management, which can be tough to demonstrate clear and quick ROI on. According to Jim Hayden, Savi EVP Products, some companies see these technologies as insurance. That view changes pretty quickly after a company experiences a supply chain disruption or negative event. One high-value shipment loss can easily bring a million-dollar revenue loss. That drives home the value of proactively managing risks for supply chain executives.    

To avoid this costly lesson, supply chain planners or operational managers should build business ROI cases for the executive team, so the impact of disruption is plainly visible, not only in shipment hard dollar loss, but factoring in potential brand erosion and customer churn.  

For some, the cost is another barrier to adoption. The Deloitte and MHI report found that some companies are concerned with the cost of deploying sensors and the costs associated with the maintenance of networks and storage space required to collect and communicate the sensor-generated data. Additional investment in analytical tools to make sense of the sensor data, too, is needed.

Here’s where it’s important to monitor the evolving market of IoT.  With the massive growth of IoT devices, the cost of sensors has dropped significantly. The price of an accelerometer, which can sense acceleration, shock, and vibration, has declined 80% since 2006, according to the Deloitte and MHI report. And with some companies such as Savi Technology offering bulk rate prices of $50 and under for sensors, companies have strong incentive to begin deploying sensors on some if not all goods in transit. Technology evangelists should also share that the Deloitte and MHI report found “The price of moving data across networks and of securing storage space has also plummeted and there is little reason to think the costs of technology will not continue to decline.” 

What Will Drive Mass Sensor Adoption? 

Gartner forecasts there will be 25 billion devices in use by 2020. Several developments help pave the road for mass adoption: 

  • Costs have dropped sharply, leaving little financial risk for implementation
  • Sensors offer a low barrier to entry — an easy first step to greater supply chain visibility    
  • Visibility supply chain products with worldwide geo-fencing of ports and transport hubs facilitates more use cases and ways to drive value for organizations  
  • Device capabilities have expanded — more data storage, greater durability, and longer battery life  

Companies are producing more feature rich sensors, including making sensors that can be autonomously programmed with OTA (over the air) commands to adapt to changing needs. For example, a sensor might alter the frequency of its transmissions from every five minutes to every hour to conserve battery life if a missed handoff causes a shipment to be diverted from rail to ocean.   

With sensor technology now available at significantly lower price points, the number of sensors deployed on individual pallets or cargo boxes will rise quickly. Companies who take advantage of sensor tech and SCM software and analytics solutions will recover their investment by reducing risk and increasing opportunities for better supply chain orchestration, lower costs and higher customer satisfaction. 

Better visibility and traceability across every inch of the supply chain has the potential to not only help individual companies but partners and vendors as well. While some companies may have the buy-in and resources to use IoT and sensors to achieve competitive advantage, others may move in phases toward the digitization of their supply chain. Regardless of where you are on the continuum, the ultimate goal is visibility into all the activities of your fleet, drivers, and suppliers to assure that the flow of in-transit inventory is always seamless. Trust, collaboration, and good communication across the supply chain ecosystem will be paramount to making this a reality. 

Marianne Mannschreck, Director of Marketing, Savi Technology 

Image Credit: Everything Possible / Shutterstock