Will Internet of Things Revolutionize logistics?

Imagine a company whose inventory system uses sensors to collect data on when and how it should be replenished. The obtained information is then sent to suppliers where the machines proceed to prepare the order and calculate its price. The order is then delivered straight into the inventory of the first company. The system automatically updates itself, and managers have access to the most up-to-date information, so they can make important business decisions. This is one of many possibilities how IoT can influence businesses, specifically inventory tracking systems. However, all possibilities have one prominent feature: everything is done without any human intervention. That is how the future will look like with Internet of Things (IoT).

The concept of Internet of things is based on the idea of interconnected devices which can send, receive, and analyze data without human interference. The key words here are ‘analyze’ and ‘without human interference’. In fact, this is what makes IoT more appealing than present technologies that generate data but do not analyze it to make ‘smart’ decisions. Therefore, Internet of Things has a strong potential to bring significant economic benefits to business by reducing logistics expenses, throughput times, and increasing company responsiveness to customer needs.

First, interconnectedness of devices will enable asset tracking which would allow companies to follow their products from the very beginning to the end and determine where costs can be reduced. A survey by GT Nexus and Capgemini determined that 70% of retail and manufacturing companies have already began with digital transformation in their supply chain. Of course, companies do use barcodes to track goods right now, however, newer RFID tags can provide a much wider range of information (including storing conditions, for instance) as well as synchronize with other smart devices in the warehouse to maximize information input and ensure that right decisions are taken.

Hamburg Port, the second busiest port in Europe, for instance, uses IoT sensors to monitor traffic in the port area and to track wear on bridges. The sensors also give parking information as well as provide information on possible traffic disruptions that may happen when ship traffic requires bridge closures around the port area. Thus, IoT helps the Hamburg port to acquire up-to-date and relevant information to maximize efficiency.

One more use of IoT devices that can significantly decrease costs is preventive maintenance. This means that, by installing electronic sensors on the machines, companies can increase facility availability. Smart IoT sensors will be able to track the performance of machines, collect necessary data and provide managers with relevant and timely information. Additionally, the program will be able to give predictions about future maintenance times. Moreover, IoT can alert managers that a machine is exceeding appropriate levels of vibration or temperature, is malfunctioning, or is otherwise prone to fail. This could significantly increase machine availability and, thus, reduce opportunity and maintenance costs for companies.

Additionally, IoT can reduce throughput times, that is increase production efficiency. By connecting all the devices, company can always track its operations and, therefore, take decisions to alter the production process, if needed, to prevent delays. Continental Tire is a great example of a connected production facility. The company suffered from delays because of misplaced components for tire manufacturing in its huge plant environments, which relied on grid lines painted on the floor and handwritten notes to locate carts with rubber and other tire components. As Wi-Fi sensors were placed on these carts to integrate them with management inventory system, employees were able to view individual cart locations on their smartphones. As a result, employees now can locate fast where the necessary materials are, so Continental is able to increase production efficiency, and cut wasted component costs.

Finally, Internet of Things will be paramount in creating exciting new experiences for many types of customers, in diverse ways. One of IoT’s most interesting use cases is the application of beacons for customer recognition. Beacons, small sensors that can connect wirelessly to individual mobile devices, use Bluetooth signals to detect devices in proximity to the sensor and recognize them. These low-cost sensors can be attached to store displays, mannequins, walls, doors, ceilings, ATMs or any other surface. The system would be able to identify customers as they enter the store. As a result, companies will be able to send targeted marketing messages, promotions, and value-added services to customers. Moreover, these can be customized to reflect the priorities of individuals in any given moment as the system has identified an individual and analyzed its buying habits based on available data (which was collected by other IoT sensors previously). This approach to customer experience is called “hyper-relevance”. Beyond mere personalization, hyper-relevance enables consumers to receive what they want, when and how they want it due to IoT technologies.

Internet of things is a technology that is going to shape the future and revolutionize how people think and live. It is expected that Internet of Things will substantially benefit business by reducing logistics expenses, throughput times, and increasing company responsiveness to customer needs. The technology is expected to facilitate gathering and sharing of information as well as the decision-making process. The economic benefits from this technology such as cost optimization, decreased throughput times, relevant information about the machine performance, interconnected production facilities, or greater company responsiveness to customer needs are very meaningful and promising. Therefore, it is safe to assume that in several years, IoT will be actively used in business and daily life leading humanity to a simpler, cheaper, and more efficient world.

Geraskina Sia,
International Business Administration student,
Rotterdam school of Management, EUR

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