Smart Factories, or how IoT helps factories to be more intelligent

23 de octubre de 2020, by Juan Pérez-Bedmar

Factories are evolving and digitalizing. But how has IoT impacted them? How does it help them to become smarter?

In previous posts we highlighted the impact of IoT in our daily life, in modern cities and in business in general. But how has IoT impacted factories? Everyday more sectors are joining the so-called “fourth industrial revolution” of Industry 4.0. Disruptive technologies are used to create these Smart Factories. By the way, we wrote some tips a few weeks ago about mistakes you definitely want to avoid when implementing IoT in industrial environments. We recommend you read it.

As defined by, a “Smart Factory is the one where machines and equipment improve all their processes through automation and optimization, reducing time and saving costs”. The structure of a Smart Factory includes the combination of production, information and communication technologies, with a clear potential for integrating the whole supply chain. Digital technology allows companies to work more autonomously and to execute diagnosis to predict, identify and repair malfunctions with minimum impact to the production process.

IoT in factories, and more precisely in the logistics of the supply chain, has the potential to transform the processes involving decision making and in how merchandise is stored, monitored, transported and delivered to the customer. Additionally, IoT allows a combination of different technologies that, applied to a manufacturing environment, brings new opportunities to the business. It’s not about having isolated digitised silos but squeezing the technology as much as possible to create a real IoT ecosystem that benefits the whole supply chain.

According to a study by the logistics operator DHL, 95% of stakeholders said they feel incapable of leveraging all the information posed by technologies such as Big Data, the Cloud and IoT technologies, with the latter being defined as the most promising for the logistics sector.

IoT has a long road ahead in logistics because it´s use implies connecting physical objects that have been traditionally isolated; the amount of potential information is formidable. The Logistics industry is in a privileged position to benefit from everything IoT has to offer.

Barbara and Revoolt

IoT in Smart factories: Logistics at its best 

We can’t talk about IoT and Logistics without mentioning 2 of the biggest actors in this sector: Amazon and Inditex. Those two companies are a clear example of intelligence in Logistics, perfection in communications and information in real time. Both have understood how to take advantage of connecting components in their supply chains. By analyzing all data provided by them and extracting valuable insights they can take informed decisions and apply corrective measures when necessary.

According to Antonio Iglesias, director of Logispyme and academic coordinator of the ESIC’s Master in Logistics and Supply chain + SAP ERP, the main achievement of the Inditex logistics engine is precisely what have made them a world reference: “flexibility to adapt to consumers’ likes in every country, enabling them to adapt in a very short timeframe to any variation of the supply chain, from design to manufacturing and distribution”. The proof of that is that, since the shop or the online customer makes the purchase order, the provisioning occurs in no more than 48 hours to any place on the globe (36 if it is in european soil). 

But, as Iglesias points out in the text from Gerencia de Riesgos y Seguros, there are some key aspects to make this logistics process work: the control of the inventory in each one of the platforms and the correct management of the information from customers’ orders from shops (where the stock is easier to program) and from e-commerce (where they have to manage a bigger number of orders with a lower quantity of goods). All of this is achieved through IoT.

Let’s think now in a logistics center or a warehouse from Amazon. How much merchandise of different type, shape, provider and origin circulate in a day? The answer is thousands of units. Having pallets and their content identified with RFID labels is a relatively easy way to implement a smart inventory system. Once stored, RFID labels can offer information in real time, so the company can track shipments and avoid stock breakage. They can consider connecting cameras at the entrance to detect damages, and deploying sensors to monitor relevant field data.

Transporting goods smartly

The transportation of goods is another main area in logistics. Coming back to Inditex, they can ship their products in a record time as we have seen. In all this process, tracking is crucial. They need to know if a box has been damaged or opened, if there has been any theft…IoT allows companies such as Inditex to have full visibility of the status of the merchandise during its transportation and make sure it arrives on time to the right location in perfect conditions.

IoT not only helps to achieve that, it also plays an increasingly important role in the drivers’ safety. Cameras strategically placed in the vehicles can monitor the driver’s eyes and his/her facial expression to detect signs of fatigue and warn him/her.

And finally, the “last mile” delivery is not an exception to the IoT boom. Customers are demanding sophisticated services that IoT can help to successfully cover. As an example, DHL Parcelbox is a system that allows users to install at their home´s entrance a locker with a smart lock to deliver and receive packages.

To conclude, Logistics has traditionally suffered from deep fragmentation of legacy solutions that have required a complex endeavour to assimilate into one workable system. IoT is the engine that makes this holistic integration smooth. 

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