Gartner forecasts there will be 20 billion connected devices in use by 2020; this growth brings substantial and affordable advantages for operations management in asset tracking.
PLS is a specialist provider of managed technology solutions for tracking assets. In this guest blog they explore the benefits the Internet of Things can bring to supply chains.
In a connected world that demands efficiency, enhancing supply chain visibility can add significant value for any business.
Today, supply chain management is relevant to every business; whether it’s component manufacturing or financial services, every business is comprised of critical path activities that require considered management to ensure products and services reach their end destinations.
Our increasingly-connected, commoditised world demands the efficiency that is created with effective operations management and this manifests itself in an endless cycling of assets – referred to here as anything on which the delivery of an end product depends, whether it be packaging, people, documents or tools – through supply chains, moving at speed to ensure they are in the right place, at the right time, and in the right condition.
With volume and velocity, however, comes complexity, and this gives rise to a third “V”: visibility. Or, more specifically, a lack of it. Maintaining sight of large volumes of assets moving at speed, on a daily basis, is a significant challenge for businesses in every sector
Limited visibility has costs
Take retail distribution, for example. The UK’s largest retailers operate multiple million-square-foot distribution centres dotted around the country, tasked with delivering merchandise to thousands of stores every day. This presents the challenge of tracking the daily movements of thousands of roll cages and tote boxes. To date, elegant solutions have been thin on the ground, and this has resulted in significant operating costs – of asset loss and replacement; of asset damage and repair; and of losses in productivity and ad hoc costs incurred to implement short-term fixes. In the absence of an effective system of managing assets, retailers often default to the simplest solution of buying more, resulting in unnecessary capital expenditure and bloated, uncontrollable asset pools.
Similar problems are apparent across sectors beyond retail: the cost of crucial documentation not being received can be significant for banks; the business of insurance is knowing the facts, and a lack of visibility of the assets that they are insuring can lead to mistakes; and those supply chains that hinge on assets being in the right place at the right time to operate – automotive, for example – can suffer substantial productivity losses if things don’t go to plan.
The answer lies in technology
Passive radio-frequency identification (RFID) hardware is bringing substantial benefits to physical supply chains.
In the early twentieth century, passive RFID was widely touted as the answer to everything from passport control to animal tracking, but the prohibitive cost of hardware and the relative lack of expertise on offer meant that the technology failed to gain a foothold any in area of operations management, including supply chain asset tracking. Today the story is different: passive RFID hardware is affordable, expertise has matured and physical supply chain professionals are, slowly but surely, seeing the substantial benefits of implementing RFID-led solutions.
The technology space is constantly evolving. The emergence of active and geo-positioning technologies will undoubtedly change the landscape again in the medium-to-long-term future, with their greater flexibility for working across open-loop supply chains and the greater depth of data that they can collect, but we have found that passive RFID, above other viable technologies such as Bluetooth and GPS, offers the best balance of functionality, affordability and usability.
Passive RFID solutions are infrastructure-light, user-friendly, quick to deploy and extremely reliable, driving significant and almost-immediate value for adopters.
Software has kept pace. Big Data and the Internet of Things are the new normal, and software has adapted to suit, allowing for the development of innovative, sophisticated cloud-based platforms that users can access anywhere, at any time. At PLS, we have developed a bespoke, proprietary cloud-hosted software solution that interacts seamlessly with our hardware deployments, consolidating data from every data point to generate intelligence in real-time.
Significant benefits and rapid ROI
Simply put: large, costly business problems + effective, affordable solution = significant value.
Coming back to retail, our experience, working with some of the UK’s largest businesses, suggests that a typical five-year asset tracking project can eliminate CAPEX altogether and that operations management of this type can significantly reduce operational expenditure through asset pool optimisation and reduction of ad hoc expenses; and deliver greater productivity, increased store service and a tighter, smarter, more efficient supply chain. That’s before considering CSR and environmental benefits.
Best of all: a typical five-year deployment can generate a return on investment of 300 to 500%. In fact, even the most conservative savings estimates for one of our larger customers suggests a recovery of the entire five-year cost within just the first year of deployment.
The value is significant, transformational and realised very quickly.
Given the importance of supply chain visibility and the problems being encountered in other industries, we expect that the value will be just as significant outside of retail.
Adapting to the new normal
We understand that an affordable solution with a fast ROI and little intrusion on existing business processes reads like a dream for supply chain professionals. But it’s not: it is the new reality that connected technologies bring.
The Internet of Things is happening. Today, there are nearly 6.5 million ‘connected things’ in use across the globe, up 30% from 2015 and accounting for nearly $1.5 trillion in spend. By 2020, Gartner forecast that there will be over 20 billion1, with over $3 trillion spend, over half of which will come from industrial applications. It’s a relentless wave that will impact even the most basic business processes.
There is no excuse for failing to adapt; those who do not embrace the substantial value that wireless technologies offer on operations management are likely to find themselves chasing an increasingly informed, efficient and savvy pack of competitors.
Founded in 2000, PLS is a specialist provider of managed technology solutions for tracking and managing assets in complex supply chains. The company works with a number of blue chip companies across Europe, managing over 20 million asset movements per year.