IoT and delivery: How pallets, packages and products are talking back
The Internet of Things (IoT) promises big things in the world...
By Ian Jindal, experienced multichannel retailer and Editor-in-Chief of InternetRetailing
The Internet of Things (IoT) promises big things in the world of consumer goods, but even bigger things in the evolution of the supply chain. Research firm Gartner says IoT will completely change the world of delivery operations and that a thirty-fold increase in Internet connected physical devices by the year 2020 will significantly alter how the supply chain works. Morgan Stanley estimates that 75 billion devices will be connected to the IoT by 2020.
The numbers are certainly mind-blowing, but what will its impact on the supply chain actually be? In a word – exciting. IoT is allowing the supply chain to come alive. It allows for much greater tracking and intelligence throughout the supply chain than has ever been possible before – connecting people, processes and data via devices and sensors. In fact many predict that IoT will lead to a complete redesign of many existing supply chain processes.
But its biggest impact will be to allow both businesses and customers greater visibility of their products and parcels than ever before.
This has always been an area in which retailers have struggled. They have looked to work closer with supply chain partners and delivery operators to improve visibility and trackability, but essentially they have simply been hampered by their remoteness. They rarely own the supply chain or delivery operations and so their ability to ‘see’ where items are has been limited. But this is changing fast.
RFID enabled pallets are nothing new, but the ability to combine this with sensor devices for a much richer range of information is. Today, goods can not only be tracked via GPS but sensor devices can also now track and combine other data and influence upon the transit of a package – from weather conditions and traffic jams to the temperature of a parcel.
Within the warehouse and at pallet level, warehouse stock can be better monitored and more intelligently tracked when in transit. This will allow for supply chain companies and retailers to work together to better improve efficiencies through things like reducing fuel costs by optimising routes.
First lead by Staples and later by Amazon and Ocado, now, for instance, the use of connected robots in warehouses to move racks of merchandise around and help prepare online orders for shipment is a growing trend.
Grocery etailer Ocado is also leading the way in terms of implementation of IoT to optimise their delivery process. To manage their delivery fleet efficiently, the brand equips delivery vans with a range of IoT sensors logging valuable information such as the vehicle’s location, wheel speed, engine revs, braking, fuel consumption and cornering speed. The vans then stream back this data in real time and is later fed by Ocado engineers into the routing systems. In the future, the selection of the best route will bear this information in mind. It will now take into account the challenges and advantages of prior routes, as well as potential traffic jams and road closures, the day of the week or if there are school holidays, best parking location and reducing fuel consumption, amongst other things.
The adoption of IoT not only offers benefits to retailers, customers also profit from huge advantages. With adoption of new technology, consumers also obtain the ability to more closely monitor parcels and to find out not only where they are but also what is happening to them, making the use of IoT particularly exciting in the last mile scenario.
Indeed the end of January saw a new IoT device that does just that. The ParceLive is a postcard sized device that is put into the parcel at the point of distribution. As well as GPS tracking it can also monitor everything from position of parcel to temperature and light – meaning that those sending and receiving the parcels can see both where the item is and how it is being handled en-route and whether it’s been opened or not.
This is a big step up from simply tracking the arrival of a product and, whilst realistically it’s only really applicable to high value, fragile and time or temperature sensitive packages, it shows the exciting new capabilities that the integration of IoT can bring into the supply chain and particularly the final mile.
IoT within the home will also revolutionise the ways in which customers buy, with products directly communicating with order systems when replenishment is required. It’s already happening with Amazon’s launch of its Dash Button last year, allowing customers to reorder goods at the point of use but eventually such functionality will be built into products themselves
Now that really is IoT bringing the supply chain to life.
Adoption of IoT in fulfilment and delivery as well as all the latest technology in packaging, parcels, stock management and warehousing will be presented at this year’s eDelivery Expo (EDX), at the NEC Birmingham on the 5th and 6th April.
World-class speakers from brands including Sainsbury’s, Harrods, ASDA, John Lewis and Ocado, will lead two days of inspiration learning and networking. They will be sharing insights and best practice on what the future has in store for fulfilment and how retailers can improve their operations strategy and performance to navigate the challenging times ahead.
Find out more and register for free at www.edeliveryexpo.com
The January issue of Supply Chain Digital is live!
Follow @SupplyChainD on Twitter.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”