Challenges Facing Today’s Supply Chain
In an increasingly digital and globally connected world, an organization’s supply chain becomes more and more complex. At the same time, consumers and investors are demanding transparency and sustainability across a company’s entire value chain.
On a scorecard of sustainable practices, businesses can be evaluated based on the maturity of their supply chain management. Basic supply chains look at regulation compliance and nothing more. More mature supply chains select and allocate spending toward suppliers who display high performance in sustainability. Meanwhile, true industry leaders in sustainability invest in training for their suppliers (such as helping a farm achieve organic certification) and ask that suppliers expect sustainable practices from their suppliers in turn.
Businesses are struggling to maintain reliable, end-to-end visibility over their supply chains. It’s an issue most visibly pressing for food and auto manufacturing industries, as product recalls can result in losses of over $100 million. But it’s an issue for everyone. For that reason, advancements in Internet of Things (IoT) technology are increasingly relevant to businesses looking to boost efficiency, transparency, and accountability in their supply chains.
First, let’s clarify what we mean by IoT technology. The IoT is more than just things — it’s a network of sensors, devices, information flows, and underlying infrastructure that works to connect the physical world to the digital world. IoT networks collect data from real-world objects, communicate and aggregate that data, and then present results that can directly impact the bottom line.
A Deloitte study on the interconnected supply chain divides information flow through the IoT into two types:
- Data in motion — real time, perishable insights
- Data at rest — insights that require large volumes of data
Embedding IoT technology into supply chain management can help businesses streamline both types of data.
How IoT Can Provide the Missing Link
Companies around the world have already begun integrating IoT technology into their supply chain practices, generating substantial results for their bottom lines. Ford, for instance, provides a detailed case study to examine.
Compressed air systems provide the basis of several operations at Ford plants, but they come at a cost — sometimes up to millions of dollars a year. That’s what inspired former senior manager Joe Ghislain to take a systems approach. He and his team used advanced sensors to meter and monitor the systems’ baseline usage in addition to continuous performance. The sensors take pressure readings at different times, under different conditions, and at different critical points of production.
Ford took action on this data and formed an air leak detection and correction team at a plant in Michigan. By combining information from these readings with historical data on energy consumption, the team fixed its leaks, shut down a high-consuming compressor, and adjusted controls on the rest. As a result, the plant reduced compressed air usage by 18 percent and energy usage by 7.9 million kWh — translating to $400,000 a year.
The team at Ford was empowered by the comprehensive access to data that IoT technology provided them. With both “data in motion” (real-time data from installed meters) and “data at rest” (larger volumes of historical data), the team could see the bigger picture of usage over time and thus accurately pinpoint inefficiencies.
Barriers to Overcome
We would be remiss if we didn’t mention the shortcomings of the IoT as it stands. The IoT is essentially a combination of several distinct technologies, with little standardization. Standards need to be defined and accepted in order to verify the security and resilience of IoT infrastructure.
The effectiveness of information flows is only as strong as the weakest link in the chain. And several factors can create a weak link: lack of trust between stakeholders, errors in collection or transfer of data, data breaches, and more. Neglecting a weak link will inevitably lead to a costly fallout, which is why businesses must gain a clear picture of the full depth and complexity of their usage and impact. Only then can they succeed at greening their supply chains.
About the Author
Tim Porter has more than 20 years of experience in sales and business development, specializing in technology and software. In his current position, Tim serves as Urjanet’s global OEM and partner sales director, managing a team responsible for building relationships with energy and sustainability partners and expanding Urjanet into international markets. Learn more about Urjanet at https://urjanet.com.