Gartner forecasts that more than half of major business processes would partially incorporate IoT by the end of the decade. Furthermore, up to 26 billion intelligent IoT devices will be installed, making nearly $300 billion by 2021.

Also, the study shows that the number of internet-connected physical devices has increased thirty times and will dramatically affect the functionality of the supply chain. Besides, the enterprise and automotive Internet of Things market will grow to 5.8 billion by the end of 2020, meaning a 21% increase from 2019.

How IoT Architecture Revamps Supply Chain

The primary goal for IoT adoption by SCM is the possibility to track shipments and specific items accurately. It enables employees engaged in logistics to effectively track their cargo transportation and inventory. Still, IoT is far beyond being just a usual asset supervision. Let’s see some critical insights into how IoT can reshape the entire supply chain potential:

  • Warehouse monitoring. Special sensors enable checking the goods’ conditions during shipment — from the temperature level inside the transport and package, pressure tier, humidity level, and many other critical factors that can affect the product’s integrity.
  • Anticipate when the parcel will arrive to warehouse or certain location. Warehouse managers can benefit from the broad-spectrum IoT functionality, enhancing thereby the quality of how you make decisions and boosting the accuracy of shipment forecasts. Real-time tracking allows them to foresee the final date and time of delivery, recognize and diminish risks.
  • Location-tracking in real time. IoT gives supply chain workers a consistent real-time information on the location of the orders and packages regularly. In case the product is sent wrongly, you immediately get alerted and can track the delivery till the destination.
  • Upgrade contingency planning. With IoT devices at hand, employees could better plan routes by taking into consideration the unforeseen events that could occur on the way. IoT collects all data required to create a flexible emergency plan and prevent existing delays.

Some Roadblocks When Using IoT Architecture in SCM

Despite the widespread adoption of brand-new digital solutions, most enterprises still apply almost ancient systems and platforms for SCM and order monitoring. Integrating IoT-based solutions into your environment that combines both the legacy and the innovative systems is tricky for most managers, and here’s why.

Lack of Capable Team

Adapting to managing internet-connected systems usually implies fast training of warehouse workers and transport drivers. Introducing the security rules and explaining the user guides for company platforms is a time-intensive process.

With the lack of IoT experts on the market, finding a qualified team to build a solution specifically tailored to the customer’s needs is quite problematic. Keeping this in mind, supply chain executives should realize that building an experienced team won’t be easy.

Security Threats

Developing a secure IoT architecture is an objective supply chain supervisors have to perform before switching to connected platforms. Vulnerabilities related to data storage and its processing can lead to external attacks and leaks, undermining the company’s reputation and raising the price of failure.

The good news is that company leaders can safely mitigate external security risks and access all stored data by leveraging ML and cryptographic hardware activity reports.

Issues with Data Storage

The possibility to process large amounts of data is another good thing for SC managers that IoT implementation offers. Still, with that advantage comes the need to get servers sufficient to store, analyze, and process all information. Company leaders need to create data governance procedures and hire data scientists to ensure they make accurate reports from IoT-based analytics.

Connectivity Problems

IoT doesn’t work without a reliable internet connection. As drivers go from one country to another, there is an urgent need for a stable network. Hopefully, this will soon be the issue of the past as internet coverage expands and 5G spreads quickly. So far, managers in the SCM process have to tackle this obstacle.

Bandwidth is also a big concern for SCM. Connected systems typically consume much bandwidth and require the uninterrupted operation of high-level farm servers.

IoT Application in Different SC Subdomains

Here are some instances of exploiting IoT in retail and manufacturing supply chains.

  • Manufacturers profit from immediate production by getting goods ready as soon as they are to arrive.
  • Chemical companies make use of IoT tools and devices to guarantee that their raw materials remain safe by monitoring and alarming if they’re impacted by high temperatures.
  • Businesses use IoT-enabled cameras to recognize defects and discard damaged products.
  • Farmers use IoT devices to check soil moisture and determine the best time to plant or harvest.
  • Food retailers check the products’ temperature and humidity in stock and guarantee that the stores will receive high-quality goods.
  • Retailers collaborate with specialized logistics parks to track products as they arrive at distribution centers.

Real and Successful Cases of IoT Adoption in SMC

Nissan

Nissan uses IoT automation to connect different industrial plants. The company leverages smart warehouse management platforms at its factory in Sunderland, UK.

Amazon

Amazon utilizes connected robots to manage warehouse processes. The primary goal of robots is to recognize products by scanning their QR-codes on the parcel.

Volvo

Volvo has an IoT cloud system that tracks the shipping process of car components from various locations and car delivery to their global suppliers.

New Maersk Line

New Maersk Line launched a unique system that monitors the products’ level of temperature and humidity. It also monitors weather conditions, and thus improves route planning.

Tips to Successfully Implement Architecture of IoT

There are some recommendations from pioneers in the IoT adoption, those who work through the challenges of integration yet creating significant business value.

Get the CIO Involved in Operations Early

Some organizations had not such a good start with IoT than initially anticipated. Nevertheless, the IoT continues to evolve and adopters are getting better at reaping the benefits from it. All in all, the IoT initiatives are more likely to succeed if the Chief information officer (CIO) is involved from the very beginning.

According to the Gartner survey, 80% of companies that have embraced IoT showed they are making slow but steady progress.

Nick Jones, a distinguished VP and analyst at Gartner, states that while the survey displays only self-reported achievements, real benefits from IoT are displacing the hype.

Know Common Pitfalls That Hinder IoT Value

Privacy, as well as security, are the primary technical difficulties when adopting IoT into a company. Based on Gartner’s research, the situation won’t change until 2025. The main reasons are the lack of skill, ever-changing threats, unreliable service providers, and unstable standards.

“IoT is not just a technical problem to be solved,” — says Jones. “To move IoT beyond the pilot phase, think proof of value, not proof of concept. Technical POCs do not convince executive leadership to spend money on IoT.”

The non-technical issues involve:

  • Weak user experience with IoT tools
  • Organizational and political issues
  • Budgeting gap

Enterprises have even more hurdles to overcome, including compromised products’ quality, lack of local infrastructure and immature communications services, global technical assistance across continents, local laws, and cultural barriers.

To sum up, the Internet of Things is applicable in many sectors of supply chain management. Besides allowing for tracking and controlling the goods on each phase of their lifecycle, it brings more transparency to the communication and increases planning accuracy.

An IoT-based platform has become an attractive investment for small businesses and enterprises as long as they have a clear idea of what they want to get from an IoT solution.

Onboarding a team of high-skilled specialists to design and develop a robust and modern IoT-based platform is critical. To ensure your IoT system for SCM is built following the current tech trends and is fully functional, reach out to a dedicated team of software developers.