Home' MHD Supply Chain Solutions : MHD Jan-Feb 2016 Contents embedded within devices to the internet in
real time to make service planning and other
decisions, as well as make devices such as
engines and medical scanners intelligent.
The capabilities emerging today take business
model concepts originated years ago to new
heights. Current use has similarities to asset
monitoring, for example, that’s been in place for
many years. However, the connectivity of the
ecosystem is richer today, such as monitoring
the complete health of an asset and making
that visible near real-time to preferred suppliers.
When combined with advances in data storage,
business process and the availability of
analytics, this delivers greater value.
The business benefits of IoT impact revenue
and profits through improved operational
capabilities. As with any new technology, however,
the IoT provides tremendous opportunity, but also
substantial challenges to these operations.
Some of the most important supply chain
opportunities we see include:
Visibility: Billions of connected devices will
enhance SCV to causal attributes across the
network that impact demand, product and
supply. This includes monitoring for supply
readiness the environmental conditions of
sensitive packages and multichannel goods
in transit, or product usage data that will help
Control: With better visibility comes the ability
to predict and control outcomes, such as the
impact of rising temperatures on a package
that could indicate potential shipment damage.
Supply chain practitioners can adjust supply
chain processes as a result.
Decisions: With the right analytics, supply
chain executives can make better decisions,
such as rerouting a pallet of strawberries to a
closer store to eliminate potential product losses
from expiration date issues, or more efficient
deployment of field resources.
Along with these opportunities, also
Variability: More IoT signals can create noise
that must be managed carefully. Variability adds
complexity to a supply chain, so deciphering the
data that matters will be important.
Data: A potentially massive increase in the
volume and variety of data will make master
data management (MDM) more important than
ever, placing a premium on talent.
Security: All these connected devices
introduce a cyber-risk threat into the supply
chain, which should be incorporated into every
risk management plan. Without stifling growth,
chief supply chain officers (CSCOs) must be
the voice of caution when your company moves
down the IoT path.
Prepare today for a supply chain that will
need to incorporate granular data from many
more touchpoints across the network within five
years. Proceed with cautious optimism, however,
by understanding the maturity of IoT and its
readiness to bring value to the supply chain and
enable digital business.
Learn potential impact from
Whilst IoT is delivering value within the supply
chain today, pay attention to how it is being used
elsewhere in the business and across industries.
In some cases, these practices can be applied
to supply chain operations. In other cases, IoT
is used to create new business models that the
supply chain will need to support.
Disney, for example, is experimenting with
wearable IoT in its parks to enhance their
customers’ experience using the MagicBand.
Not only does it provide convenience by
replacing the need for credit cards, room keys
or tickets, it allows Disney to optimise the traffic
and flow of goods and services by analysing
data based upon the movement of attendees.
In essence, this is a scenario that will someday
scale to much larger supply chains.
Current innovations will
reach the supply chain
Innovation is active in IoT as new devices come
on the market and companies explore ways to
derive value. While these innovations may still
be in early stage and not fully deployed, they
provide valuable insight regarding potential
supply chain capabilities.
The Australian Football League (AFL), for
example, is experimenting with extending the use
of wearable technology to enhance the television
audience experience, so that a fan watching can
feel the impact a player feels during the game.
The power of wearable devices will extend supply
chain visibility out to individual customers in both
consumer and industrial environments. This
will provide data including location and other
attributes yet to be discovered.
In another example, healthcare company
Novartis is experimenting with ingestible sensors
on medications to monitor medication dosage,
as well as physiology to assess the patient’s
response. This data is communicated to a
patch worn by the patient and transmitted to a
data warehouse where healthcare teams can
run deeper analytics. This demonstrates the
potential for supply chains to define their role
in helping to deliver better patient outcomes.
One day, this innovation could provide real-time
demand insight into what therapy the patient
will require to maximise their health.
Any excitement over the future potential of
innovations like in these scenarios, must also
be balanced with cautious optimism and a solid
understanding of their maturity.
Beyond the device
The value of IoT does not come from an
individual intelligent physical thing. The benefit
comes from a network of connected things
harvesting billions of data points that can
provide meaningful insights. However, this
network can’t convert this data into useful
information to act upon without several other
layers of functionality.
When seeking to determine the readiness
of IoT to benefit your supply chain, look at the
many layers that work together to deliver value.
Each of these layers is undergoing innovation
simultaneously and intelligent things, application
analytics and other layers are evolving rapidly.
Another thing to be aware of is the various
barriers to adoption. A Gartner survey identified
cybersecurity and privacy as the top inhibitors
across multiple business processes and
industries. You must recognise these barriers
and include plans to address them as part of
any IoT project.
A world of connected devices represents
a great opportunity for supply chains in all
industries. However, you must understand the
challenges and risks. Consider what makes
sense for your own organisation. Innovation
is inherently risky. Be prepared to walk a
fine line between deploying technology now
versus asking the right questions concerning
readiness, as IoT becomes part of the daily
Michael Burkett is a research vice president
and chief of research for the Gartner supply
chain team, drawing on more than 15 years
of manufacturing experience introducing and
supporting products from concept to end-of-
life. Heading Gartner’s cross-industry research
on product life cycle supply chain strategy,
he is regarded as a leading expert, having
co-authored the first industry publication to
define the product life cycle management
market. For more information visit
“Be prepared to walk a fine line between deploying
technology now versus asking the right questions
concerning readiness, as IoT becomes part of the
daily business processes.”
MHD SUPPLY CHAIN SOLUTIONS — JANUARY / FEBRUARY 2016
WAREHOUSES OF THE FUTURE
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