The application of Internet of Things (IoT) solutions can give businesses a broader view of the entire supply chain and enable manufacturers to make quick decisions by exchanging information. real-time information exchange.
Over the past nearly two years, severe supply chain disruptions have occurred in many sectors. In the report “Intelligent Supply Chain on the Internet of Things – IoT” report just released, HSBC said that, more than ever, businesses need the support of technology to have an overview. across the supply chain, have access to real-time data so you can make quick decisions and stay agile during uncertain times. And IoT technology can meet this need of enterprises.
IoT solutions to support business continuity
“We expect the COVID-19 pandemic to be a catalyst for businesses to apply and invest in IoT technologies as a solution to ensure continuity in the event of an external shock. future,” the HSBC report reads, adding: “IoT can help businesses cut costs and improve efficiency and flexibility throughout the supply chain, from manufacturing in factories. smart to intermediate shipping and after-sales service”.
Accordingly, the application of IoT solutions can give businesses a broader view of the entire supply chain and enable manufacturers to make quick decisions by exchanging instant information according to real time.
In particular, the COVID-19 pandemic underscores the importance of having access to such data. By knowing where inventory is located, when parts are out of stock, or knowing the exact location of a package in transit around the world at any given time, businesses can have a have a better overview of the supply chain and be able to respond flexibly to future production and trade disruptions.
IoT helps businesses cut costs, improve efficiency in the supply chain
The pandemic further emphasizes the importance of digitization.
A recent Inmarsat survey found that more than half of respondents said that challenges related to COVID-19 further emphasize the importance of IoT, while 47% have accelerated progress. deploy IoT projects to respond to the pandemic. This survey also shows that businesses that have accelerated IoT deployment or have an IoT strategy are better able to weather the pandemic.
A survey of manufacturing businesses in North America also found that about half of them are considering smart factory deployment and 47% are considering IoT solutions to prepare for operational disruptions. Future. This result is further bolstered by a survey conducted by Microsoft in 2021, in which the survey found that the pandemic prompted 44% of surveyed businesses to see the need to invest more in strategy and solutions. IoT solutions (compared to 31% in 2020).
Businesses plan to invest more in IoT technology.
Another Gartner survey found that 47% of businesses plan to increase their investment in IoT technologies to reduce costs in the future. In which Gartner estimates that by 2023 one-third of medium and large enterprises that have deployed IoT will deploy at least one “digital twin” due to COVID-19. Digital twin technology is essentially a virtual simulation of a device that allows businesses to track and analyze the physical ontology in an industrial environment. This technology enables them to perform predictive maintenance, assume several scenarios, and optimize asset operations.
Production and predictive maintenance.
Predictive maintenance is an important application of IoT. IoT sensors can support predictive maintenance on plant equipment by helping to reduce downtime and thereby reducing costs for the business.
IoT solutions can be used to collect data on product defects, while wearable IoT devices and other devices can help alert workers to possible accidents in the workplace. smart factory and support training and maintenance. For example, Bosch’s augmented reality (AR) solutions can help auto mechanics see the locations of hard-to-see parts in their vehicles, along with troubleshooting instructions as well as troubleshooting instructions. as specific tools to use. Bosch estimates that such AR application in car service workshops can save an average of 15% in lead time per stitch (even on conventional vehicles and with less complex repair tasks).
Transportation and warehousing… and remote monitoring of packages in transit.
IoT technologies can be deployed to monitor and adjust climate conditions for temperature-sensitive goods during production, transportation, and storage. For example, Maersk’s Remote Container Management (RCM) system allows customers to remotely monitor the location and conditions (such as temperature and humidity) of refrigerated containers in real time. Maersk transports 27% of the world’s refrigerated containers, according to them, about 350 million tons of food must be discarded each year due to lack of storage and delays in transportation. Currently, about 94% of Maersk’s 380,000 reefer containers have RCM technology to support.
Remote monitoring and control of product temperature during transit is also important for other industries such as pharmaceuticals. According to Carogsense, about 25% of vaccines lose quality on arrival due to improper transportation conditions, while the IQVIA Institute found that the biopharmaceutical industry loses about $35 billion a year due to thermal errors. degree in transportation. In fact, this number is even higher amid the outbreak and the worldwide release of a COVID-19 vaccine.
IoT solutions can be used for temperature-sensitive goods…
Using IoT sensors can help pharmaceutical manufacturers proactively locate weak links in the entire supply chain where temperatures can change. change and ensure products such as vaccines are safe in cold environments. For example, according to the International Air Transport Association (IATA), over 50% of temperature changes occur during air transport and at airports.
IoT sensors can also be used to ensure reusable packaging items such as crates, boards and trolleys are not lost during transit.
… and manage and move inventory.
In the warehouse space, IoT technologies can be used in autonomous guided vehicles (AGVs) to calculate shortest routes between shelves and unattended replenishment. people, inventory management, and order fulfillment. For example, Cainiao – Alibaba’s shipping unit – has nearly 700 IoT-enabled AGVs that receive and deliver goods inside the warehouse. The AGVs can charge their own batteries and are expected to help employees significantly reduce the distance traveled during the day, thereby increasing work efficiency by 30%.
IoT can be used in after-sales service such as predictive maintenance which reduces the costs associated with product returns by reducing the likelihood of customers returning a product if the defect is corrected in a timely manner. The data can be used by companies to improve future products and tailor designs for the better.
Positive impact on environment, society and governance (ESG)
One big benefit of IoT apps, says HSBC, is the ability to monitor ESG metrics. Factors such as energy efficiency, waste and water use are captured through sensors allowing for efficient resource management and more detailed, accurate results.
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In supply chains, IoT device monitoring helps track metrics across the globe, yielding real-time carbon data and predictions. From there, stakeholders can accurately understand the impact, allowing businesses to record data more efficiently and provide a better overview for investors.
According to Danfoss, IoT solutions have helped food retailers save about $37 million by reducing food waste (e.g. by temperature monitoring) and cut 2 million tons of CO2 in just five years. via. Furthermore, IoT solutions can be used in transportation to shorten shipping routes, which means reduced fuel consumption, while predictive maintenance using IoT technology can help prolong the life of goods. life of critical equipment and thereby help reduce waste.
In addition, many IoT projects are contributing to the United Nations Sustainable Development Goals. Currently, 84% of IoT application activities contribute to these goals, 75% of which focus on the big five goals. In particular, “industry, innovation and infrastructure” and “responsible consumption and production” all contribute to strengthening the sustainability of the supply chain. It should be noted that environmental factors such as energy use in production, limited supply of raw materials, and e-waste must be considered in light of the growing number of IoT devices.
“Gathering data from IoT devices in the supply chain offers many potential benefits for both businesses and consumers,” the HSBC report reads.
In particular, for businesses, monitoring factors such as air and water quality to optimize health status helps support employee welfare. Tracking assets such as goods and facilities allows for a more transparent supply chain, so consumers can monitor where and when goods arrive as they move along the supply chain.
For the banking industry, the HSBC report said that the role of banks in the supply chain mainly revolves around: (1) providing operating capital and (2) trade financing to support the flow of goods. cross-border communication.
Essentially, both working capital and trade finance serve the same purpose of allowing suppliers to manage their short-term cash flow needs. This relates to a current cash flow shortfall that arises in the period between the payment of inputs, production costs, and delivery and the receipt of payment for those goods from the buyer. final. Usually, this “gap” in cash flows becomes larger when goods need to go through another country, and this “gap” is filled with short-term credit from trade finance banks.
“This bank credit will be secured by the goods in the supply chain themselves. If IoT technology can enable trade finance banks to accurately track inventory fluctuations in the supply chain, they can reduce credit risk because they can better handle collateral,” the HSBC report highlights, adding: “Over time, this can reduce trade finance costs.” to customers as the perceived bank credit risk will be reduced. Trade finance is a banking product that is inherently considered low risk, but IoT can reduce the risk even further.”