The supply chain havoc caused by the coronavirus pandemic has left an indelible mark on the minds (and businesses) of manufacturers, wholesalers, resellers and retailers. Lockdowns and restrictions have hampered manufacturing and shipping, leading to shortages of pharmaceuticals, electronics, food and raw materials in almost every sector.
A McKinsey study on the impact of this prolonged disruption revealed something very interesting: while 75% of companies surveyed faced issues with their supplier base, production and distribution, 85% said they were struggling. with “insufficient digital technologies” in the supply chain.
The solution? Nine out of 10 leaders who participated in the survey said they plan to focus on digitizing the supply chain to improve its resilience. Specifically, they examine these areas:
Centralized supply chain planning
Requalify the workforce for digital planning and monitoring
In the endless search for maximum efficiency and savings, digitization of the supply chain is closely linked to smart manufacturing processes. And it still has a lot of catching up to do – the smart manufacturing industry is expected to grow from $250 billion in 2021 to $658 billion in 2029.
A handful of technologies are driving this parallel growth of smart manufacturing and supply chain technology:
Industrial Internet of Things (IIoT): Devices that enable data collection from multiple points of interaction, factory automation, GPS-based shipment tracking, and machine-to-machine (M2M) and machine to person (M2P)
Artificial intelligence (AI) and machine learning (ML): to automate production, storage, ordering decisions, etc.
Wireless Sensor Networks (WSN): to record environmental changes and enable the transmission of this data between IoT devices and between IoT and the cloud
5G: for better network connectivity distributed over large geographical areas
Big data: enables advanced analytics and better results
Let’s see how all of these technologies combine to accelerate supply chain innovations, improve product distribution and shipping, and help companies set and meet customer expectations.
Unnecessary complex infrastructure
Expensive hardware for tracking systems is one of the biggest barriers to adoption of supply chain analytics. Moreover, the tools and devices available in the market are proprietary and subject to dependence on vendors. Setting them up is a byzantine process that takes time.
This is changing with the introduction of inexpensive IoT-based data loggers that can be attached to expeditions. These instruments measure a variety of environmental factors such as temperature, tilt angle, shock, humidity, etc. to ensure the quality of goods in transit. Data loggers connect to centralized data management systems and transfer their readings, enabling efficient recording, analysis and decision making. It also eliminates the need for expensive radio frequency transponders, receivers and signal towers – you don’t need to install gateways or other special tools to use them.
For example, data logging company Logmore has developed data logging devices with QR tags attached to sensors. This allows you to send updated status data to a cloud-based server or database from any point in the supply chain by simply scanning a QR code with your smartphone.
Using such devices, you can instantly set up secure, automated logging and monitoring for thousands of products from a centralized ERP or supply chain management system. This also applies to companies that have never used supply chain logging before.
“The biggest benefit comes from the quality and volume of data,” said Niko Polvinen, CEO of Logmore. “For example, every shipment of perishables needs to be temperature monitored, but the less expensive the solutions, the more sensors a shipment can have. This brings the sensors closer to the actual goods and improves quality and adds to the total amount of data, ultimately enabling everyone in the supply chain to make better decisions, so waste is reduced and processes are optimized.
This brings us to the value of timely data and analytics.
Democratization of data
Traditional supply chain analysis and decision-making focused on risk prevention and control. Today, the easy, real-time availability of data from loggers and other devices encourages “opportunity thinking” – manufacturers, suppliers, distributors and retailers can all plan ahead, capitalize on opportunities in their segment of the chain and even take calculated risks to increase income.
The more data you have, the more you save. Some obvious benefits that supply chain analysis brings to the table are:
Better forecast of demand, supply and sales
Shipping and Fleet Tracking
Better risk management and less disruption
Less waste, damage or reduced inventory
Increased visibility and transparency for all parties involved – data transmission, recording and reporting is done using readily available cloud-based infrastructure and networks
Instant decision-making and control throughout the process – companies can decide to destroy something, proceed with delivery or return it at any time
All of this is only possible when companies are able to use the data generated by the monitoring system. Traditional surveillance devices kept their data locked in proprietary databases, locking companies into their systems in the name of security. Ultimately, companies lacked the ability to analyze this data, gain insights, or build applications around the results.
Now, however, IIoT-enabled data logging devices are paired with APIs that help you analyze, reuse, reformat, and funnel supply chain data into business intelligence systems like ERPs and CRMs. to better optimize operations. For example, you can embed dynamic status data from a recorder with QR codes on product labels (which contain predefined product information) and let client systems process and cross-reference this embedded data using from the recorder API. The result is extended tracking and planning capability down to a single specific item.
Supply chain data often helps an organization increase transparency and cooperation across multiple, if not all, departments.
The future of the supply chain is IoT
Some industries still operate smugly thinking that they don’t “need” oversight throughout their supply chain. They see it as an additional expense. But they could benefit immensely from logistical tracking and transparency if they are assured of the payoff (companies selling fragile electronics or brands plagued by counterfeits and copycats come to mind). Digitizing the supply chain – with hardware and software – is the way forward for them.
Speed and reliability have always been and will continue to be the defining factors of the supply chain for the foreseeable future. The next few months will be crucial for companies leveraging data to improve their supply chains. They have an unprecedented opportunity to leverage the momentum and insights gained from COVID-related disruptions by adopting newer technologies and systems. Those who fail to adapt to changing realities will likely be left behind by more nimble competitors.