Logistics Redefined – The Power of the Internet of Things

The Internet of Things (IoT) has become a key focus in many industries and the logistics sector is no exception. The developments in IoT offer many opportunities to optimize operations and generate new business. In this article, I give my thoughts on the areas in our industry that IoT technologies have the most impact on and explain the drastic changes this will trigger. 

IoT holds a vast number of use cases for the logistics industry. This shouldn’t come as a surprise, many visions of the future paint pictures of everything being connected: Humans, cars, products, and even roads.

Even if the opportunities offered by IoT technology are endless in variety and complexity, the definition of the term is simple. IoT is the interconnection via the Internet of computing devices embedded in everyday objects, enabling them to send and receive data.

The idea of smartly connecting all the links of a value chain, while all components within those links exchange data automatically, holds massive potential for supply chains. Most of all in terms of operational effectiveness, but IoT has so much more to offer.

Gaining Insights Automatically with IoT

The goal of connecting different elements of complex systems is to make those elements listen, gather information, and communicate with each other to work more effectively together. Another important point that makes IoT technology so valuable, is the ability to gain insights into the workings of these components. Analyzing this data then allows us to improve systems, equipment, and processes.

But how and where can the logistics industry apply this technology effectively?

Leveraging IoT

1. Shipment Tracking and Condition Monitoring

IoT technologies have tangible optimization potential for shipment tracking and condition monitoring. In this case, position sensors enable the tracking and tracing of shipments in real-time, both in-facility and in-transit. This allows for a holistic picture of the shipping process. Therefore, tracking via position sensors can enhance transparency in supply chain operations.

Condition sensors can also help monitor and document the environmental conditions of shipments (e.g. temperature and humidity), which is particularly crucial for the safe delivery of sensitive goods such as medical products.

2. Yard Management

Smart sensors secured on vehicles, material handling equipment (e.g. fork-lifts), and in buildings (e.g. at docks of warehouses) can improve yard operation efficiency. But what would that look like?

A truck is identified by license plate recognition systems when it enters the yard. Based on the sensor information from docks and doors, the smart yard-management system recognizes which docks are available and assigns them to the vehicle. Then, the forklift driver is notified via an app to enable a seamless dock operation. Consequently, the unload time is reduced and the accumulated data analyzed to assess general operational efficiency.

IoT technology can also enhance safety. Sensors detect hazardous situations (e.g. forklift collision accidents) and warn the driver – or even slow down the vehicle or material handling equipment.

3. Predictive Maintenance

One of the most praised application areas of IoT for numerous industries is predictive maintenance. It is based on the idea that advanced predictive analytics can enhance the planning of supply chain equipment. This is, for example, achieved through sensors that detect the condition of in-service equipment and machines.

When the equipment or machine reaches a critical stage in its lifecycle, operations personnel are warned that maintenance is required. This way, maintenance windows can be narrowed down. As a result, the machines work more efficiently, which also reduces equipment costs.

IoT based predictive maintenance could also control spare parts supply. When a machine is about to break down because of a failing component, a spare part can be proactively selected, shipped from the warehouse to the needed location, and delivered before the machine stops working.

The IoT Vision: A Fully Automated, Self-Controlled Supply Chain

IoT is already present in the logistics industry. However, we still have to grasp the full potential that it holds for us. Let me give you a few examples:

• In the long run, IoT is likely to enable a fully automated smart supply chain. Ordering processes would be triggered by smart sensors, warehouse transactions fully controlled by smart sensors and executed by connected actuators, and fully automated transportation monitored by IoT platforms that independently react to external events.
• Machine learning enabled demand sensing analytics based on IoT technology will be able to provide even deeper insights into customer demands. This, in turn, will enable further optimization of the supply chain.
• Machine learning enabled, independent system control will likely drive the supply chain from a purely automated to a self-controlled system. Such a system requires almost no human interaction. Examples include the automatic planning, triggering and re-routing of transport based on machine learning-enabled risk prediction, also without any human interaction.

IoT will be the backbone of a fully digitalized supply chain. It will enable further innovations that have the power to fundamentally change the design of supply chain models. From site level, e.g. further advanced, self-controlled (autonomous) warehouse operations equipment, to network level, e.g. enabling a fully connected self-controlled value chain, the possibilities are vast.

Outlook

As business leaders, we should all embrace the great opportunities which IoT offers to stay ahead of the curve. It is important to understand that focusing exclusively on isolated use cases will not be enough. We need a holistic approach to tap into the full IoT potential. The first step in this journey is to evaluate the changes required in our organization and culture to get the company on board.

How do you think IoT will impact your industry, or has it already left its mark? Join the conversation and share your thoughts on my blog or LinkedIn accounts.

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