How IoT Improves Supply Chain Resilience?

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When the 2020 COVID-19 pandemic hit Europe and North America, industries were caught completely off-guard. From medical supplies and lumber to toilet paper and food products, panicked consumers raided store shelves while manufacturing plants were forced to close as a precautionary.

It became evident that supply chain management, and supply chain resilience, were going to become very important in the upcoming months and any advantage that new technology could afford would be welcome from both retailers and manufacturers.

In a word where natural disasters, changes in international trade relations, and countless other factors can disrupt a global supply chain, business leaders must seize and create every competitive advantage they are capable of. With the help of the Internet of Things, connected factories and distribution centers have never been in a better position to adapt to global changes while creating more resilient supply chains.  

 

What is Supply Chain Resilience?

Supply chain resilience is a term used to describe how susceptible a supply chain is to disruptions or unexpected changes, and its ability to recover after these disruptions. This can involve elements of risk management, predictive analytics, and strategic resource allocations.

From a plant engineering standpoint, supply chain management, and achieving supply chain resilience has become a very interesting challenge ripe with opportunity through the leveraging of IoT technology. And for good reason. With more and more IoT sensors being implemented within the manufacturing sector, every factory can become a smart factory virtually overnight by simply measuring output through the use of connected smart devices.

IoT has already allowed plant managers and industrial engineers to track every possible KPI across an assembly line or supply chain. The next great leap in innovation is being able to predict and adapt to immediate changes on-the-fly, all while mitigating supply chain risk.

The following benefits are all attainable with the use of IoT technology and, with time, will spearhead a new approach to managing global supply chains:

Standardized Factory Automation

When something gets disrupted within a supply chain, plant managers need to act quickly and contact every part of the chain affected by the disruption. Thanks to advances in factory automation, changes can be reported automatically and instantly, allowing a supply chain to adjust their operations to constantly changing conditions.  

Automation can also be applied to the planning process of a supply chain. By predicting events such as adverse weather, raw material shortages, or other similar triggering events, artificial intelligence, and IoT technology can alert manufacturing plants, key suppliers, distribution centers, and retail outlets simultaneously. This gives them time to ramp up production or adjust inventory levels well in advance while diverting resources from other sectors.

Supply levels can also be categorized as triggering events, proactively preventing stock depletions when demand is high through intelligent product inventory management. Although many jokes were made about the toilet paper shortage that occurred at the beginning of the 2020 COVID-19 Pandemic, there was a certain fear from some consumers of an actual depletion of stock. Manufacturers had to adapt their supply chain operations to avoid long depletions without overestimating the short-term spike in demand to avoid excess warehousing costs.

Increased Transparency

When all involved parties know where everything is at all times, efficiency becomes a very tangible metric. With the help of IoT technology and real-time tracking from product information management data, distribution centers and manufacturing plants no longer have to be in the dark when ordering or waiting for materials and products.  

When IoT sensors are properly integrated into a supply chain’s logistics management systems through the use of traceability software, a plant supervisor can use PIM data to know exactly when to expect a shipment and how much material is arriving, then plan accordingly. Staff can be scheduled for the right times, peak hours can be predicted, and manufacturing operations can remain lean and efficient with little down-time.

There’s also the added benefit of being able to track merchandise at all times. Theft still makes up $15 billion of all annual losses for supply chains. 87 percent of these losses occur in freight yards and warehouses. By integrating IoT tools and PIM software that allow real-time tracking, these losses can be reduced significantly.

Predictive Analytics

Thanks to advances in machine learning and the popularization of artificial intelligence in manufacturing, a smart supply chain can predict and forecast trends that cannot be seen by the human eye.

From temperature changes and seasonal shopping periods to unique buying cycles. All of these cyclical changes can all be measured and predicted over time. This is a powerful tool for any industry.

If a smart factory can predict an uptick in demand over the next few months, it can adjust the amount of raw material it needs from a supplier network ahead of time, how many trucks it will require to move the finished product, the number of employees needed for a specific period of time and the increase in production costs.

With so many KPIs being analyzed within a smart manufacturing operation, leveraging the data being collected by IoT sensors is one of the greatest advantages that IoT technology affords supply chain leaders. It allows manufacturers to be more efficient, a crucial metric in a competitive marketplace. All while building resilience within their supply chains.

Reductions in Cost Overruns

In the world of manufacturing, wasted resources are lost profits. From unused raw materials to employees sitting around on standby to malfunctioning industrial equipment. All of these factors cut into a manufacturer’s bottom line. Luckily, with the advent of IoT technology, everything can now be measured, analyzed and assessed in real-time. With more information at their fingertips, plant managers and industrial engineers can detect where inefficiencies are eating away at profit margins and correct the problem immediately.

In the event of a supply chain disruption, such as machinery breakdowns that cause an excess buildup of raw materials, resources can be diverted to other processing plants on-the-fly and the materials can be put to use quickly, allowing operations to continue with minimal interruption.

There is also the advantage of being able to scale inventories to their bare essentials without experiencing interruptions. It costs money to store goods in a warehouse, and having merchandise just sitting around does very little for either manufacturers or consumers. This is doubly true when certain local markets are experiencing shortages of those very same products.

With more intelligent capabilities, manufacturers can pinpoint which markets are running low on product, which markets are currently oversaturated, and reallocate supplies quickly. Warehousing periods can be minimized, costs can be cut, and products can reach their end customers more efficiently.    

With major impacts affecting global supply chains across industries, supply chain resilience has become crucial to success for manufacturers and smart factories. With the help of IoT technology, industrial engineers and plant managers can help supply chains gain a competitive edge by becoming more agile, efficient, and adaptive in an ever-changing landscape while mitigating and managing risk.  

For more on IoT technology and how it can help manufacturers remain on the cutting-edge, visit the Schneider Electric Exchange community. 

First look on Exchange

Sources: 

Building a Resilient Supply Chain

Is There Really a Toilet Paper Shortage?

Industrial & warehouse Security: put a stop to theft and pilferage

Can digital technologies make supply chains more resilient?