IoT (Internet of Things) is a unique technology that will impact (actually it is impacting already) dramatically in our daily life and will have huge implications in the way we do and manage business. One of the industries where this impact is being more obvious is logistics.
IoT has the potential of transforming logistics decision making processes, as well as the way goods, are stored, monitored, transported and delivered to the customer. Furthermore, IoT creates a myriad of new opportunities and business models that we need to explore.
First of all, let’s take a look at what IoT means and its influence in Logistics sector. IoT is the networked connection of physical objects. Before IoT, only computers were connected. Now, literally, everything can be connected to the Internet. When we connect this formerly unconnected devices, a huge amount of information is suddenly revealed, and we can take advantage of all this information.
But, how important will be having available all this information provided by IoT devices in Logistics?
Cisco systems estimate that more than 50 billion devices will be connected to the Internet by 2020. PC’s, tablets and smartphones will only represent a 17 percent of all these connections, the other 83 percent will be IoT devices (DHL Trend Research and Cisco Consulting Services; “Internet of Things in Logistics”). In addition, according to Strategy Analytics, there are approximately 15 billion of devices connected to the Internet, but the number of devices that could benefit from an Internet connection would be roughly 1.5 trillion (Strategy Analytics, “Connected World: The Internet of Things and Connected Devices in 2020).
Despite this can be seen as low penetration rate, the truth is IoT deployments have grown more than a 300% since 2012. In line with it, we can expect IoT generating about 8 trillion dollars in Value at Stake over the next 10 years, of which 1.9 trillion corresponds to supply chain and logistics alone.
Two main factors are influencing clearly to leverage IoT in logistics. First, the obvious technology push we are experiencing, with smaller and more efficient devices, better communication networks and huge data analytics capabilities. Second, logistics customers are demanding solutions based on IoT technology (integrity control, shipment tracking, improved efficiency…).
As result of all these events, logistics industry seems to be in an excellent position to benefit from all IoT have to offer. IoT can connect several components in a supply chain and analyze the data provided by this components to get new insights, make informed decisions and apply corrective measures when needed.
Let’s take into consideration some specific areas of Logistics supply chain where IoT could improve efficiency.
With thousands of goods of different sizes, forms and typologies a logistic operator´s warehouse is a clear example of an area with great room for improvement. Using RFID tags is a relatively easy way to implement smart-inventory management and having perfectly identified pallets and its content. This RFID tags can contain information like volume and dimensions to determine where is the most suitable place in the warehouse to be stored. In addition, we can attach cameras to inbound gateways that could be used for damage detection by checking pallets imperfections.
Once pallets have been stored in the indicated place, RFID tags can transmit information to have real-time visibility of stock, avoiding out of stock and misplacement of any package. For products sensitive to temperature and/or humidity, sensors will monitor this variable and alert the manager when this levels are compromising the goods.
Not only pallets and goods can take benefit of IoT, Swisslog, a leader in the logistics sector, has implemented “SmartLIFT”. Combining sensorized forklifts with barcodes placed strategically in the warehouse, they created an indoor guidance system that provides the driver with accurate information about specific pallet location, avoiding misplacement and inventory errors. Including new sensors (radar and/or cameras) and actuators to forklifts allows them to communicate each other and check the surroundings to detect people or objects that may cause a collision. According to U.S Occupational Health and Safety Administration, forklifts contribute to more than 100000 accidents per year only in the US, with almost an 80% of them involving a pedestrian.
Freight transportation will be another important area where IoT will help logistic operators. The most common application is track and trace. Theft costs logistics providers billions of dollars per year. Temperature, humidity, shock and specific sensor detecting if a box has been opened, enables the logistic company to gain full visibility on the goods’ status during the transportation. It will assure the cargo will arrive on time, to the right place and, of course, intact.
Secondly, is not all about the cargo; what about the vehicles? What about the drivers? IoT is revolutionizing these aspects as well. Sensors can be installed in the oil system of a truck to determine when a piece of the machinery is degraded or damaged. This information allows the truck itself to determine whether is time or not to go to the workshop before any catastrophic damaged is caused in the motor. Back in 2012, DHL and Volvo implemented a system like this, finding that trucks availability increases up to 30% .
Finally, IoT will play a role in the safety of truck drivers, preventing accidents that may have serious consequences. Strategically placed cameras can monitor drivers eyes and facial expression looking for fatigue symptoms like excessive blinking or pupil diameter. When this symptoms are clear, the truck can tell the driver is the moment for a break.
As the last step in the supply chain, Last-mile delivery is not an exception of boost by IoT solutions. Customers demand sophisticated services that IoT can help to supply successfully. One great example is DHL Parcelbox
Users can install a personal locker with a smart lock in the front door of their place to send and receive packages. Messengers have access to this boxes that are sensorized to indicate the messenger if there is any package to collect or not. In the near future, they will be able to include temperature sensors in the box to allow groceries delivery. Vehicles can be sensorized to determine things like the fastest route for deliveries, predictive maintenance, group deliveries in the same area… improving operational efficiencies.
In conclusion, a list of use cases along the supply chain have been presented, but the way IoT can change logistics paradigm is not with verticals isolated. It’s all about squeezing technology potential and creating an IoT ecosystem from which all actors in the sector can benefit.
Logistics has a huge fragmentation and a great number of legacy solutions. A strong collaboration between all parties is required to overcome some of the key challenges:
- standardization of identifiers and legacy solutions for tags
- interoperability between several kinds of information systems
- management dashboards
- actuators and sensors
- confidence in data generated and shared
- privacy concerns
Nothing will happen without the most important thing (and probably the most difficult), change great organizations mindset, culture and processes to embrace this thriving technology and its huge benefits.