The IoT and next-gen logistics for Supply Chain 4.0

2021 saw some of the greatest impact to the global supply chain we have ever witnessed.

 

The Chinese government closed the Yantian container port in May in its battle against Covid-19. In August, part of the Port of Ningbo temporarily closed the bulkheads. And most famously in March, the Suez Canal was blocked by one of the world’s largest container ships after it ran aground.

 

Each of these events greatly disrupted the diverse global linkages that make up our economies. Combined, its impact resulted in widespread delayed deliveries, production bottlenecks and shutdowns at affected plants that had to wait for essential components.

 

These events have made it very clear to us: global trade means global dependencies, no matter the size of an enterprise. Success for companies relies heavily on raw materials, components and products being readily, if not permanently, available. This is precisely the Achilles’ heel of the just-in-time economy.

Luckily, new, and innovative technologies such as smart sensors and process mining are helping to redefine production and supply chains.

 

Chip shortage: a crisis for the global economy

 

Nowhere is the fragility of this system currently more evident than in the global shortage of chips. The lack of these components is growing into a crisis for the entire global economy, partly because a fundamental change in production has occurred in recent years.

 

The importance of software and electronics has increased massively. From computer games to smartphones, intelligent washing machines, and e-scooters on pavements – hardly anything in our everyday lives can do without chips and other electrical components.

 

Today, up to 1,400 computer chips are installed in a modern car – and the trend is rising. In July last year, the chip shortage was predicted to negatively impact planned UK car production volumes by up to 100,000 units. 

And so, manufacturers, along with suppliers, partner companies, and the entire economic ecosystem that has established itself around the automotive industry, are suffering from the chip shortage – and this is one industry of many.

 

Transparency with tech

 

What is needed then to ensure the upmost reliability when planning? In short: supply chains need to become more digital. In practice there are a few things that can be done to affect change.

 

More transparency along value chains is essential. Transparency helps to map and design supply chains to be more agile. Any potential delays can then be identified at an early stage, alternative suppliers can be located, and a company’s own production processes can be adapted more easily.

 

Thankfully, these technologies already exist today, but we need the willingness to use them. Smart, industrial Internet of Things (IoT) and tools such as process mining are essential enablers and create more planning reliability.

 

Understanding the possibilities of these technologies is essential for businesses to get the most out of them. A classic container, for example, is not intelligent and therefore can’t provide any relevant data to help bolster logistics operations. ‘Smartifying’ these metal boxes – by installing smart sensors and connecting them to comprehensive IoT platforms – we can monitor things like interior temperature and exact location, to help improve the supply chain.

 

Once you have the right data, you can start to give meaning and action to it. Is it too humid in the container? Is the salt concentration in the air too high? Is there a dangerous level of vibration?

 

The answers to these questions are relative to what’s inside the containers…but smart devices can be programmed to understand that, which enables far moe effective management of the cargo in question. That can then be extrapolated to see impact on its timely arrival and the integrity of the goods.

 

Smart sensors along the entire supply chain

 

The container is just one building block along the entire supply chain. IoT can create smart warehouses, where sensors monitor the respective inventories in real-time and their condition. Consumption data from deployed truck fleets, driver behaviour, and vehicle locations can be accessed in real-time using IoT and merged with other data via a cloud infrastructure.

 

Sensors can create innovative production facilities and keep an eye on all the important figures automatically. If deviations occur in the production process, the IoT-supported solutions can determine the possible causes independently and suggest measures to optimise production.

 

IoT goes far beyond the Radio-frequency Identification (RFID) technology that is already widespread in logistics. RFID only allows for updates on deliveries when a product arrives at a destination, but it fails to allow any statements to be made about everything that happens on the way there. IoT solutions do more. They make it possible to look at the entire value chain of a product.

 

Process mining is the solution

 

Classic methods for analysis monitor processes in silos, where each department or partner ultimately analyses its process step. Process mining provides a holistic view of the overall interrelationships of all these processes.

 

Process mining provides the answer to how different process interact with each other and draws from the data that businesses already have in their systems. It then combines this data with a variety of other available data sources and can benefit from all the information that IoT solutions contribute.

 

The entire course of value creation is thus put under the digital microscope and can be dissected down to the last detail. Why does a specific freight take longer than the usual average time? Why do deviations occur in production? Process mining solves this.

 

The future is flexible, agile, and data-driven

 

Making the supply chain more digital and ‘smartifying’ more of the components within it can have a huge impact on operational efficiency. Once a more digital strategy is in place, there are other doors that can open up, around automation, for instance.

 

Further ways that not only can the carriage of goods be made quicker and cheaper, but that the communication, responsiveness and resilience of global supply chains can be strengthened.

 

Needless to say, IoT can’t build chip factories and process mining doesn’t replace container ships. But by implementing technology in the right way, businesses can achieve greater insights to prevent strained supply chains from collapsing.

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Sanjay Brahmawar is CEO at Software AG