Jim HaydenFaced with increasingly complex global markets, labor issues and major economic fluctuations, supply chain leaders are looking for solutions that can help meet these challenges. Here's a look at the supply chain trends for 2016 that will help global organizations optimize their logistics operations.
Internet of Things-enabled Solutions Will Drive Transformational Change Across the Supply Chain
Internet of Things (IoT)-enabled strategies will enable global organizations to connect their products and processes to ensure optimal real-time analysis. In the past, typically up to 80 percent of the cost associated with analytics projects were related to preparing and integrating data. However, industrial IoT-enabled expertise and solutions, which help to easily integrate and analyze sensor data, show a dramatic ROI.
IDC anticipates that IoT technologies will be materially affecting the way that all companies manage their supply chains by 2020 — with estimations that the IoT market will reach $1.7 trillion.
Additionally, Business Insider reported that 82 percent of businesses are planning to implement IoT solutions by 2017 (Business Insider, Internet of Everything). As a result, we expect that supply chain-dependent companies will begin investing in technology innovations that leverage the power of IoT, big data and analytics. Supply chains that invest in technologies that make sense of their raw data will have a competitive edge over other companies. With this type of data, companies are able to receive end-to-end supply chain visibility as well as insights to anticipate problems, forecast outcomes, prescribe solutions and prevent costly disruptions.
Analytics solutions will provide all partners in a supply chain several key types of intelligence, such as true visibility and accurate estimated time of arrivals, risk identification and avoidance, predictive modeling to anticipate supply chain changes, and insight into improved operational processes.
True Supply Chain End-to-End Visibility Will be Achieved for the First Time
Gartner predicts that there will be 25 billion sensor devices connected to the IoT by 2020. Sensor technology is not new to the supply chain industry. Many organizations are already collecting data from enterprise systems, telematics devices, sensors, and real-time data feeds, such as weather and traffic. Despite this, due to the varied formats and the vast quantity of data, companies experience challenges integrating real-time streaming data and historical data in order to make sense of and use the data effectively. Capturing and transforming the heterogeneous data generated from ”things” on the edge of networks is the first challenge. It is often encoded in machine language such as binary or hexadecimal and sent over wireless networks. It is among the dirtiest data sources in the business world. Corrupt and incomplete data can account for a significant percentage of the messages received, and not every message sent gets received.
Due to the unprecedented availability of sensor-based data and other data sources, combined with advanced analytics solutions, data is transformed into usable intelligence in order to provide true end-to-end visibility for the first time. Massive streams of data and analytics give supply chains insights that will help them make more informed decisions by simultaneously comparing real-time metrics with past results for more accurate forecasting. The ability to turn raw data into actionable insights that are capable of driving improvements across the supply chain. Sensor-based data alone is not enough; other data sources are critical in adding context and deriving business value. Sensors provide a point in time output message driven by events or environmental readings. By correlating location, inventory, manifest and carrier data with the sensor messages you can then view the data in business context. If used for tracking shipments of finished products, sensors data combined with ERP data can tell you the location of every in-transit product down to the SKU level.
Organizations will demand purpose-built applications
According to Business Continuity Institute, 78.6 percent of organizations have inadequate visibility of their supply chains. Milestone visibility or toolkit approaches will no longer be enough. The purpose-built analytics approach produces critical insights that will drive action across supply chain — as supply chains seek to know what happened, what will happen and what should happen. In addition, purpose-built application implementation can be done in weeks vs. months.
Greater Focus on Logistics Efficiency and Accuracy
Major trends in transportation have changed little over the past few years, with many challenges still existing around supply chain logistics planning, such as cross-docking and accurate estimated time of arrivals (ETA). In continued efforts to address these challenges, we anticipate that transportation companies will augment traditional transportation management systems (TMS) with sensor analytics technologies. Sensor analytics technologies will provide companies better visibility and deeper knowledge of their supply chain performance based on the collection and analysis of real-time and historical data. This will allow companies to leverage existing data from TMS, GPS and other sensor devices to accurately predict ETAs and improve cross-docking initiatives. Knowing the location of every in-transit product worldwide allows companies to fill the inventory visibility gap between warehouse and customer. Accurately estimating when a product will arrive at a port, or distribution center or retail outlet is now also possible. Sophisticated algorithms can be used to predict arrival time based on a variety of factors including: historical transit data, time of year, time of day, weather and traffic.
Partnering to Improve the Supply Chain
We expect to see a continued focus on cost reductions through better cross docking and the use of multi-category distribution centers via partnering with other companies. Partnering provides a way to leverage the unique skills and expertise of each partner so that it mutually benefits both parties. Through partnerships, companies enable highly competitive supply chains that yield benefits such as: increased market share, improved cross docking, less inventory, more accurate delivery times and overall better service to customers.
Jim Hayden is Vice President of Solutions at Savi.