Internet of Things

Internet of Things

Collection of small electronics

In this article we look at the definition and the importance of the Internet of Things to the future of warehousing. There are many definitions for the IoT but perhaps one of the most succinct is from the McKinsey Global Institute which defines IoT devices as those that “can monitor their environment, report their status, receive instructions, and even take action based on the information they receive”. According to Bob Trebilcock, writing in Supply Chain 247, people now talk about the Internet of Everything (IoE) not just the Internet of Things. According to Jack Allen from Cisco, IoE is more than just connecting things, it’s about connecting things, people, processes and data in a way that’s usable and useful.

We also constantly hear the term Industry 4.0 which is seen by many as a comprehensive transformation of the whole sphere of industrial production. Dr. Kerstin Höfle of Swisslog suggests that IoT is just a part of Industry 4.0 which, according to her, encompasses both IoT and the Internet of Services, both of which will lead to smarter manufacturing facilities and warehouses.

Each item or piece of equipment can, with the right technology, be uniquely identifiable and is able to operate within the existing internet infrastructure. Radio frequency identification (RFID) tags for example, are able to record temperature variation, impact and movement for example – key areas within a warehouse operation, especially within a temperature-controlled environment.

Today’s warehouses are more than just storage facilities – they have become important strategic locations and are seen as dynamic distribution and fulfilment centres. Today’s consumer is looking for a quick response from retailers and as a result companies are having to up their game. Data, communication and connectivity are key in this respect. Automation and technology become enablers however it is all about how we use the data in our possession and how well we can connect all elements within the supply chain.

Recent data from Juniper Research suggests that US retailers will be spending approximately $2.5 billion on IoT (Internet of Things) technologies by 2020. This includes spend on RFID readers, sensors and Bluetooth technology. Research firm IDC expects the global Internet of Things market will grow to $1.7 trillion in 2020 from $655.8 billion in 2014.

MIT scientists predict that by the end of 2020 between 20 and 50 billion products will be connected to the Internet. This “smart” technology will enable warehouses to become more efficient, more productive and more accurate. According to Cathy Roberson from Logistics TI, the introduction of AI (Artificial Intelligence) alongside IoT will enable products to re-order themselves, taking some of the guesswork out of forecasting.

Each piece of equipment will self-diagnose faults and ensure that it is operating at ultimate efficiency thus prolonging operational life and pre-empting any potential breakdowns which will adversely affect customer service.

Increased accuracy and visibility of data will allow retailers to identify the most cost-effective method of stock allocation and delivery. Data compilation and analysis will further improve stockholding and will likely lead to improved new product development and customer service.

The question is – how far are we away from this seamless connectivity? Currently warehouse automation, materials handling equipment and technologies such as voice, scanning and vision operate on separate platforms and these need to be fully connected, working together with Warehouse Management systems and Enterprise Resource planning systems in real time.

All of the data produced, once accessible, will be analysed meticulously in order to improve supply chain operations. This may require a separate platform to standardise and synchronise the data produced.

IoT will enable reasonably simple tasks such as cross-docking to take place and also allow companies to enhance their ABC and slotting techniques to ensure that products are stored in the most efficient locations. The introduction of wearable technology such as vision alongside voice will also further enhance warehouse processes and together with automation will revolutionise warehouse operations.

Recent examples, according to Tom Wadlow from Supply Chain Digital, include a Cisco and DHL project which “enables DHL to monitor operational activities in real-time through a responsive graphical visualization of operational data aggregated from sensors on scanners and material handling equipment”.

Decathlon, the sports goods retailer is also introducing RFID across its product lines to enable full track and trace capability and to ensure that the goods arrive on time, in full and shelf-ready. This requires communication and connectivity across all of their vendors, distribution centres and stores.

A note of caution however – all this interconnectivity and data storage can lead to increased security threats and privacy issues. Cyber security will play a significant role in ensuring that consumer and retailer data is not easily accessible and thus compromised.

IoT is, of course, fully reliant on the internet and communication systems. Any prolonged disruption could be catastrophic and the more people who use these systems the more capacity will be required.

However, notwithstanding security, downtime and privacy issues IoT and AI will revolutionise what we do throughout the supply chain and the fulfilment and distribution centres will be pivotal in making supply chains more agile and responsive.

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Gwynne Richards is a Supply chain consultant and trainer. His book on Warehouse Management, published by Kogan Page, is now in its third edition. He is also the co-author of The Logistics and Supply Chain Toolkit.

Key words; logistics; warehouse; supply chain, internet of things; AI; logistics consultant; warehouse consultant; warehouse training