Why more IoT isn’t the answer to supply chain disruption
Image credit: Wrightstudio/Dreamstime
As global supply chains become increasingly complex, the root of inefficiencies isn’t a lack of data, but the way in which it’s used.
Research suggests that businesses with optimal supply chains can halve their inventory holdings, reduce their supply chain costs by 15 per cent and triple the speed of their cash-to-cash cycle. Yet global supply chain disruption is still costing the average large business £150 million a year.
The much-hyped Internet of Things (IoT) has not proved to be the answer to the problem. More than 10 billion IoT devices around the world are constantly adding data to already overflowing data stores. Global supply chain disruption persists because it is not caused by a lack of data – which is why more IoT is not the solution.
The real answer lies in creating effective connections between numerous stakeholders performing a range of functions, across multiple enterprise platforms and in different jurisdictions. Until now, that has been easier said than done.
Achieving visibility in parts of the supply chain that involve goods moving between physical locations and stakeholders is difficult due to the number of independent organisations involved. It is comparatively simple to digitise a factory – with everything under one roof and controlled by one organisation. But an entire global supply chain is a very different matter.
Mobile devices enable single stakeholders to track and monitor outside their respective domains. However, the cost of such devices is prohibitive, and they present operational challenges such as maintenance and retrieval.
Now, 'data mesh' technology is providing a breakthrough. Based on distributed architecture for analytical data management, it enables end users to easily access and query data where it lives – without first transporting it to a data lake or data warehouse.
In practice, this means data from multiple supply-chain systems can be captured and combined to create a 'digital twin' of a consignment – providing a single data product from which all stakeholders can get the visibility they need.
Leveraging data across the supply chain enables a much fuller picture to be achieved at a granular level. Using data from existing systems that are part of organisations’ day-to-day operations means it is of high quality, can be trusted and the systems are well maintained.
Intelligent data orchestration is then the secret of success for the supply chain. Just like in a traditional orchestra, a 'conductor' takes centre stage and synchronises all the various data inputs.
Each separate system communicates directly and only to the conductor platform – removing the need for numerous discrete connections and maintaining data integrity. As each digital twin is created, proprietary algorithms define and assign policies to it to ensure only relevant data is captured from each connected system.
The digital twins combine data from order-management and transport-management systems with real-time data sources from other systems across the supply chain. For example, consignment and inventory data can be combined with transport schedules and allocated transport. The telematics system of the associated transport vehicle provides real-time location and condition data from the consignment which, when combined with analytics, generates detailed consignment lifecycle records, capturing key events throughout. These events can be communicated across the supply chain, improving communication and paving the way to automation of processes.
With the movement of goods from a supplier to a customer via a third-party logistics supplier typically involving at least three warehouses and two transportation legs, it is no surprise that communication is often poor and time is wasted on administration and chasing up consignments. Yet businesses often rely on partners to handle their logistics. This means they are leaving the face-to-face relationship with their customer – including communication of critical events – to a dispassionate third party.
Connecting all stakeholders and their systems improves communication – reducing disputes and saving time. It also enables businesses to control their own communications with their customers, allowing branding and customisation – and avoiding the situation where businesses let couriers handle delivery communications with their customers.
The increasing complexity of supply chains is making optimisation more challenging than ever, while the cost of inefficiencies is growing. Data mesh and intelligent data orchestration are now providing a new route to unlock supply chain value and deliver competitive advantage.
Toby Mills is the founder and CEO of supply chain visibility firm Entopy.
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