DC Velocity - IdeaBook 2016

assets or devices—from your fridge to your oven or, more pertinently, from your inventory to its container, from the container to the carrier, from the pallet to the warehouse. The more your assets can ‘speak’ to one another and share data, the more they can work together to help you improve your processes.” 2

There are three basic components that make a “thing” or a device part of the Io T: sensors, connectivity, and processors.

• Sensors track and measure the activity that is taking place.

• Connectivity to the Internet is contained in the object itself, a connected hub, a smartphone, or a base station.

• Processors enable the object to have at least some computing power.

A device must have these three components in order for it to be considered part of the Io T. These components are what differentiate a smart or IoT-connected container, for example, from a traditional container.

You might think that this capability would still be rare. But the number of Internet-connected devices that could potentially function as part of the Io T is growing exponentially. In 2003 the world’s population stood at 6. 3 billion, and there were approximately 500 million connected devices, or fewer than 0.08 devices per person. 3 By 2010 the global population had increased to 6. 8 billion, and the number of connected devices had increased to 12. 5 billion—or 1.84 devices per person. 4 For the first time, the number of connected devices exceeded the number of people in the world. The explosive growth of these devices was largely fueled by the release of the first (and subsequent) iPhones, other smartphones, and tablets.

That growth was just the beginning. The networking systems company Cisco Systems estimates that the number of Io T-capable devices will increase to 50 billion by 2020.5 Morgan Stanley believes the number will be higher: The investment banker estimates that there will be 75 billion Io T devices by 2020.6

The arrival and exponential growth of the Internet of Things has spurred what is being called “the fourth industrial revolution.” The research firm Gartner Inc. predicts that the Io T will add US $1.9 trillion in value to the global economy by 2020, 7 while Cisco estimates that this revolution will create over US $14 trillion in value over the next 10 years. 8

THE IOT AND THE SUPPLY CHAIN

As the number of Io T devices grows, so will the impact of
the Io T on supply chain operations and management. IoT
devices have proliferated and are already moving into indus-
trial environments, such as warehouses, manufacturing
plants, health care, banking and finance, and transportation.
Gartner has predicted that the growth of Io T devices will
“significantly alter supply chain leaders’ information access
and cyber-risk exposure.” Michael Burkett, managing vice
president at Gartner, takes this further: “It’s important to
put Io T maturity into perspective because of the fast pace
at which it is emerging, so supply chain strategists need to
be looking at its potential now.” 9
The number of ways the IoT could impact supply
chains—and vice versa—is incredible, and that number
will continue to grow. The following are examples of the
many areas where that is already happening:
Transparency and visibility. Tracking and monitoring
shipments in real time using a combination of sensors, con-
nected devices, and communication channels significantly
enhances a company’s ability to optimize efficiency.

Purfresh is using the IoT to change the shipment of perishable products by ocean. Purfresh is a provider of enhanced atmosphere technology and documented, real-time monitoring and control. This technology enables Purfresh to make ocean transport a viable option for even the most sensitive cargo.

The Purfresh technology provides the capacity to collect real-time data, including the atmospheric conditions inside a refrigerated container and the container’s location. The technology also sends automatic alerts (for an unexpected condition, such as an incorrect temperature or an unplanned power-off event) and provides detailed trip reports. When an issue is identified, it can be corrected remotely while the shipment is in transit, enabling perishable products to arrive intact and in good condition.

For an example of how the Io T can improve transparency and visibility in the warehouse, see the sidebar.

Proactive replenishment. Having the capability to automatically recognize the need to order and restock a product on a “machine-to-machine” basis reduces the need for human interaction. Some vending machines, for example, know when they are out of or low on specific items and will immediately trigger an alert to reorder them, instead of waiting for a service person to manually reorder products. The result is less human intervention, quicker replenishment, better sales forecasting, and, ultimately, increased revenues.