The Internet of Things (IoT) is not new. Taking into account that the internet is simply a network, as opposed to the World Wide Web which is a way of accessing information over the medium of the internet, we can deduce that the Internet of Things is the network of devices connected over the internet allowing them to communicate with us and each other. IT experts have been linking devices via networks for decades. Think about IBM’s 6Mbyte programmes it developed to monitor the Apollo spacecrafts’ environmental and astronauts’ biomedical data back in the 1960’s as an example.
The Rise of Smart Homes
Domestic applications include coffee making machines that can find coffee recipes, automatically brews the cup and contacts you to tell you it’s ready; washing machines that can be set via smartphones; fridges with touchscreens to search for recipes or create shopping lists; home security systems that allow you to see and even talk to people visiting your property; and remote control vacuum cleaners that can be switched on and controlled from almost anywhere.
Connected Appliances: Smart Convenience in Action
This is all very well for an easy home life. But what does the internet of everything mean for procurement and supply? Let’s take a simple example of a trip to the supermarket. Back in the day, a visit to a shop would involve making a written list, picking up a basket, filling the basket from the shelves, lining up at the checkout, emptying the basket, having the items checked, paying cash for the items and filling the plastic bags provided to transport your shopping home. Recently the trip to the supermarket has been transformed by the Internet of Things: The products can be scanned as you shop, there is no need to empty the basket, once scanned the items can be paid for by scanning your card.
Examples of Domestic IoT Applications
What’s more interesting is what is happening in the background: The supermarket transmits all the information of your visit into its network. It knows what you bought, when you bought it and how often. Not only does this allow end to end planning of the supply chain but it also builds up a profile of the shopping trends and behaviours of groups and individuals. Suppliers have immediate information allowing them to manufacture replacements more efficiently and effectively. The transport of the goods can also be planned to ensure delivery just in time. And this is just an example of supermarkets. From tracking goods to monitoring crops, the principles can be applied to numerous sectors and industries.
IoT’s Role in Modernising Procurement and Supply Chains
Internet of Things supports a number of supply chain strategies:
- Relationship strategies: the sharing of data improves communication and trust between buyer and supplier.
- Cost reduction: the time and expense related to gathering data and moving goods can be greatly reduced.
- Lean supply: the need to build stock to meet unknown demand in reduced leading to lower stocks being held in the right place at the right time.
- Quality improvements: the data gathered can enhance quality management improving goods as well as supply chain processes.
- Time to market: real-time data allows end to end proactive management of supply chain processes to make and move goods quicker.
The ultimate would be the Total Supply Chain Internet of Everything (TSC-IoT) where smart appliances recognise a need (milk in the fridge or oil in your car engine) and then sends the request or list via the internet where the supply chain reacts by reserving the item and immediately starts planning its replacement. The Internet of Things to come will consist of totally autonomous devices that will think for us; from growing the crops and mining the raw materials to manufacturing the goods and delivering them to the customer. And if these ‘friends’ are electric, when they break down they will simply repair or replace themselves.
Privacy and Security Concerns
It would be nice to think that Internet of Things is all positive. However, there is a downside; these devices collect an awful lot of personal data and can make decisions on your behalf without having to consult with you. Along with privacy and security, there may also be safety risks, especially where these devices can be hacked (including driverless cars). As we rely more on wi-fi enabled technology to control our supply chains the more exposed we will become to cyber attacks and security breaches.
If you currently work in a supply chain role and are interested in how technology may impact on supply chain strategies in the future, why not develop your skills further with the CIPS Diploma in Procurement and Supply. For more information on the range of procurement courses from The Oxford College of Procurement and Supply, call one of our team today on +44 (0)1865 515255 or email enquiries@oxfordpeg.com.