IoT is disrupting supply chains – and in a good way

supply chains IoT
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The recent news that Tesla is developing a prototype for fleets of long-haul autonomous trucks was the latest example of how emerging technologies are poised to majorly disrupt the logistics industry. Technologies such as big data, artificial intelligence (AI) and autonomous vehicles are already perceived to create significant competitive advantages for next-generation supply chains – and with good cause: the rising expectancy of ever-faster delivery has placed greater emphasis on logistics, fulfillment and analytics.

But the Internet of Things (IoT) – including sensors, connected devices, automatic identification and predictive analytics – is already enabling ‘always-on’ supply chains and allowing for optimization on many levels – from remote quality control to demand-based anticipatory shipping.

By using reams of data to identify patterns and predict consumer preferences as well as potential breakdowns in the supply chain, predictive analytics make it possible to reduce costs while enhancing customer service and increasing delivery visibility for the consumer.

“IoT is transforming the trucking industry by improving the traceability and controllability of in-transit freight and thus boosting profits by 10–15% annually,” Frost & Sullivan Mobility Senior Analyst Krishna Chaithanya Bathala explained to ITU News. “Integration of mobile apps and in-built sensors allow for track-and-trace of critical activities such as capacity planning, accumulation of operational data, etc., all of which are crucial for making real-time decisions.”

Innovative IoT solutions are also powering vehicle self-diagnostics, automative monitoring of cargo, smart driver management, theft prevention and dynamic route planning, Bathala points out.

IoT and last-mile delivery

With the rising demand of immediacy and price-sensitivity, the ability to quickly bring the product to the customer is becoming increasingly important. However, the last mile in delivery is often the most challenging as well as the most expensive segment of delivery – at times exceeding 50% of the total delivery cost in some countries.

By 2030, Freight as a Service (FaaS) will represent at least 30% of US total goods transportation revenues, according to a recent ABI Research survey.

According to McKinsey’s Parcel delivery: The future of last mile report last year, the total cost of parcel delivery was around 70 billion euros – with China, Germany and the United States accounting for more than 40% of the market. Growth rates are between 7-10% in mature markets such as the US and Germany, and more than 100% in developing markets, and e-commerce has been the largest driver of this growth.

This is why optimization through IoT – and other emerging technologies – is so promising.

In addition to optimizing costs, IoT also provides the consumer with more delivery options, both solving the challenge of the last mile while providing consumers with more price flexibility.

“IoT is helping last-mile delivery by helping to identify where a retailer can pluck ordered items closer to their delivery source. Rather than just taking items from a centralized warehouse, some retailers are using omnichannel fulfillment,” supply chain and logistics journalist Deborah Abrams Kaplan tells ITU News. “With IoT, they can find available items in their system that may be in a brick-and-mortar store closer to the customer. That can decrease shipping costs and shipping time, and some customers may even prefer to pick up the item from the store itself, which makes the customer responsible for last-mile delivery.”

“Some carriers are using sensors, weather data and IoT to track the temperature of goods along the route and make alterations if needed,” Kaplan points out.

Always-on supply chains

IoT is already creating leaner and more resilient always-on supply chains that are causing a shift in global buy-sell relations as well as a need for hybrid models to balance capacity, wastage, and costs, says Frost & Sullivan’s Bathala. He adds that companies are scrambling to build new strategies to build for real-time, data-driven demand powered by IoT sensor grids.

The next IoT innovations to disrupt the logistics industry will likely include fully automated goods delivery using autonomous vehicles and drones, analysts agree. We’ll be watching that unfold and parsing the implications for the wide range of stakeholders involved in making sure IoT benefits are maximized in secure ways.

Written by Dahlia Lian | The original version of this article first appeared in ITU News.

Find a compendium of ITU’s international standards for IoT in the ITU publication Unleashing the potential of the Internet of Things.

To learn more about how ITU is working to address the standardization requirements of IoT technologies, with an initial focus on IoT applications in smart cities and communities, see the work of Study Group 20

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