The internet of things (IoT) is going to be revolutionary for businesses, but your return on this new technology is going to depend on how well prepared you are for its arrival. Current estimates predict there could be 30 billion IoT devices in circulation as early as 2020, and at that level of prominence, any supply chains or businesses that aren’t harnessing the technology are going to fall behind.

So is your supply chain ready for the onset of IoT?

Main Effects to Watch

These are some of the most influential changes IoT will have for the supply chain:

  • Transportation transparency. Supply chains are complicated networks, with materials running from manufacturers to suppliers to distribution centers to retailers and, finally, to customers. We’re already using technology like GPS systems and RFID chips, but the availability of IoT will make this cheaper, more effective, and more universally accessible to improve transparency in shipping. RFID chips in pallets could transmit real-time information on its location, even incorporating elements like weather, driver routes, and traffic conditions to update its expected delivery time at each phase of the process.
  • The need for a central nervous system. With your machines, equipment, and all your individual items essentially becoming small “smart” devices in their own right, you can think of your operation as a tangle of nerves—and to control them, you’ll need a central nervous system. When your chipped supply batches communicate information, where does that information go? Your “central nervous system” will be responsible for gathering, hosting, organizing, and providing all your data to your employees and partners. You’ll need to keep that data clean, reliable, and secure.
  • The limitations of data. Data doesn’t do anything by itself. With IoT, your company will have access to more data than ever before—but that doesn’t automatically make your business better. You need on-staff data analysts to interpret that data and help you make the strategic decisions necessary to see a higher return on your investment (ROI).

Key Steps to Prepare

If you haven’t already, these are the steps you’ll need to take to make sure your supply chain is ready for the onset of IoT:

  • Choose your partners wisely. Over 70 percent of retail and manufacturing companies have initiated some kind of “digital transformation” for their logistics departments. Have you and your partners? Not all companies are going to adopt new IoT systems at the same rate, so you’ll need to work with ones that can match or exceed your pace of development. All that new data and technology isn’t going to help you if the organizations you’re working with can’t use them.
  • Train your employees (or hire new ones). Similarly, your employees will need to be ready to use IoT in their daily responsibilities. Host workshops to help them understand the importance and functionality of your new systems, and instruct them in the subjects of data analysis and data management—or hire new people who can handle those responsibilities separately.
  • Invest in an adaptive supply chain management platform. The IoT revolution needs a centralized digital platform that can adapt to the coming changes and still serve your company’s best interests in the present. Investing in a tool like SAP’s supply chain management platform can equip your business with the infrastructure it needs to accommodate new technological upgrades, and keep your data organized at all levels.

These changes don’t need to be applied overnight, but we’re going to see an explosion in the technology’s prominence over the next three years. The sooner you equip yourself for these changes, the better.

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