How Internet of Things (IoT) will Rewire Supply Chains
By Chad Lindbloom, CIO, C.H. Robinson
Today’s global supply chains span multiple geographies and disciplines, including production, customer service, marketing, sales, and finance. This is necessary in order to deliver the market agility and standards of service that customers expect. As global supply chains become more complex and sophisticated, Internet of Things (IoT) technology provides an opportunity to address some top challenges around operational visibility and the availability of real-time information. IoT will rewire supply chains and much more. Today, we are only at the beginning of this journey.
Technology within supply chains has been and continues to be a valuable differentiator and competitive advantage. Companies around the world understand the advantage their supply chain and its supporting technology can provide and are eyeing opportunities to advance their technology to bring IoT to their supply chain.
In a recent Eye for Transport (eft) white paper, The Internet of Things (IoT) in Supply Chain and Logistics 2016 Research Findings, companies were polled on all things IoT and supply chain. What eft found through their research wasn’t surprising: more than 70 percent of respondents are looking to IoT to provide timely and accurate location information. But, what if IoT could do so much more?
"In the end, governments that are more agile will lead the way in innovation, while rigid institutions will likely fall behind"
A world where IoT transforms supply chains is one where shipments are tracked down to the minute detail; where shelves don’t go empty and inventories are optimized to meet business needs; where disruptive events like disastrous weather or geopolitical issues no longer disrupt supply chains. And we’re making strides toward that. For example, we are expanding the tools and information available to all trading partners across the supply chain. A single truck owner operator can use an app to perform a tracking check call just like a GPS-equipped truck without ever picking up the phone. Similarly, a global shipper can view that tracking update anywhere in the world via a phone, PC, or tablet.
However, to fully realize the potential IoT has for supply chains, we have to work together to break down organizational silos and embrace a multidisciplinary approach. Along with these incredible opportunities, the growth of IoT also presents some challenges that companies, governments and regulatory agencies must address – all while maintaining the important balance between enforcing the necessary controls while allowing innovation to continue.
One challenge companies face in regard to the IoT is simply how to navigate and best integrate the technology into their business operations. Companies need to identify long-term goals with regards to IoT and what their expectations are from their technology. Then they need to find the right partner to bring that technology to their business. Also, I recommend that companies consider implementing one IoT concept at a time to truly measure the impact it has. From the eft study results, I would recommend companies start with robust shipment and carrier tracking.
However, private industry cannot go down this path alone. To keep pace with the growth of IoT applications and innovation within the supply chain domain, government agencies should adopt a cross-organizational approach. In June 2016, C.H. Robinson and the Transportation Intermediaries Association (TIA) were given the opportunity to testify before the U.S. Senate Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security on how the IoT impacts supply chains, logistics, and the movement of goods. The purpose of the hearing was around the DIGIT Act that creates a working group tasked with providing recommendations that focus on how to plan for, and encourage, the growth of the IoT. Within our testimony, we provided the subcommittee with several recommendations on issues government should consider regarding supply chain changes coming from the IoT.
One of our recommendations is focused on the need for effective communication and coordination between customs services and other government agencies. This plays an important role in minimizing—and, when possible, eliminating—snafus like costly customs-related delays. In the end, governments that are more agile will lead the way in innovation, while rigid institutions will likely fall behind.
We believe, as we presented in our testimony that the greatest challenge governments may face with regard to the development of the IoT is breaking down internal silos and working in cross-functional teams, much like many companies are doing. There are three key areas the government should focus on, in our opinion, to make IoT a reality in supply chains: reform archaic tax systems, combat cargo theft and engage in megacity logistics.
The IoT is inspiring innovation in supply chain management. Governments that are analyzing the policy and societal implications of an increasingly connected world—and the supply chains that are at the heart of successful businesses—are to be commended. But the rate of change is accelerating, and it is imperative that governments step up their efforts to keep pace with the IoT’s onward march. Industries must support these efforts by working with policy groups to identify challenges and solutions, and to help governments to maintain a leadership position.