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The Future of IoT in the Supply Chain: It’s Complicated

By Contributing Author | 10/17/2017 | 11:18 AM

By, Kristi Montgomery, VP of Innovation, Kenco Logistics.

Part I of III

Constant connectivity; real-time insights; the ability to interact immediately and automatically with remote technology; the promise of IoT is disrupting all industries – and it seems like the future is bright. According to IDC, worldwide spending on the Internet of Things (IoT) is projected to grow 16.7% year over year in 2017, reaching just over $800 billion. By 2021, global IoT spending is expected to total nearly $1.4 trillion as organizations continue to invest in the hardware, software, services, and connectivity that enable the IoT.

This potential for a truly connected reality is especially alluring for the supply chain, where so much can be gained from constant connectivity and insights. Previously, once a load left a warehouse, there was no way of knowing its exact state until it arrived at the next location – but, with technologies like sensors and RFID tags, a company can keep complete tabs on it at every step of the journey. This is an amazing thing for supply chain execs – and especially exciting as the enabling technology is becoming both less expensive and more readily available, meaning that full-scale deployments are much more viable now. Indeed, Business Insider predicts similar growth in this sector, anticipating that the global spending on connected logistics solutions will grow steadily form a current spend of $9B annually in 2017 to $20B in 2020.

But – for all the excitement and possibilities – some real roadblocks remain: namely, that IoT technology is like the wild west; there are no existing tech standards. And while that doesn’t seem like a big problem now, it’s going to become one very soon.

This article is the first of a three-part series examining the possible opportunities and impact of IoT rollout in the supply chain: first, a deeper look at the benefits; the next will consider the very real roadblocks that will keep IoT technologies from becoming widely and successfully adopted; and the final will lay out guidelines that companies should consider for a successful rollout.

Let’s start with the upside: the benefits of IoT technologies on the supple chain are massive, exciting and very close to realization.

  • Reduced Costs: This is the clear driver for most companies. IoT devices, such as RFID and WIFI tags, can provide significant savings in the inventory management arena: from providing real-time visibility to where inventory is physically located inside the warehouse, which can improve labor costs and inventory accuracy; to a constant stream of data derived from the devices, which can provide insight into movement within the facility, potentially helping to identify wasted trips, unnecessary touches, and process improvements. In addition, IoT devices can provide detailed, real-time asset management, which, in a global setting, provides an entirely new level of visibility. Transportation cost improvements can also be realized by having notification of actual time of arrival versus estimations.  On-board IoT devices can help with optimal routing around traffic issues, avoiding costly delays and improving on-time deliveries.  This reduction of traffic delays and idle time can also save companies with fuel costs, provide more usable drive time, and improve customer satisfaction.

  • Safety: With the ability to monitor and alert before a situation becomes dangerous, IoT technologies have great potential to improve quality and safety in the logistics industry. For food or medical shipments, for example, sensors can manage by exception for temperature controlled shipments, providing alerts when tolerances are out of compliance. Sensors and IoT devices mounted on equipment like forklifts or conveyor systems can provide real-time data on the status of maintenance or potential failures that could result in injuries.  As the technology evolves, real-time location of equipment utilizing IoT devices can eliminate traffic jams, near-misses, and accidents by ensuring the powered equipment is always aware of other devices. IoT equipment can even help with employee development: the real-time feedback provided by the devices can alert supervisors of coaching opportunities for non-compliant activities and result in improving processes in both quality and safety.

  • Regulatory Compliance: IoT technologies will offer direct benefits in regulation compliance beyond just temperature tolerance assurances. With enhanced track and trace capabilities and real-time visibility, a company with a full IoT deployment would be able to to quickly recall defective product and notify the audience with a higher level of accuracy and efficiency. The ability to narrow the focus of a recall will also enable greater cost savings and less wasted product. 

But despite all of these clear benefits – and coupled with the reality that technologies like sensors are advancing, and deployment costs are decreasing – why aren’t we seeing greater increase in IoT implementation? It turns out, the roadblocks are more complicated that they might originally seem – from obvious concerns around security to the massive issue of the lack of technology standards. Stay tuned for my next blog, where I dig into each of these challenges in turn.


Kristi Montgomery, Vice President of Innovation, Kenco Logistics

Promoting transformational change in supply chain through delivery of innovation for customer-centric solutions

Like you, Kristi knows that innovation cannot just be a buzzword.  She is a dynamic explorer of strategic innovation that drives revolutionary change.  With 27 years of logistics and supply chain experience, she leads a dedicated team of specialists in Kenco Innovation Labs who identify, research, and prototype creative ideas with the potential to impact the supply chain. Collaborating with customers, entrepreneurs, and vendors from multiple industries enables Kenco to think “inside” the supply chain box and create unique, customer-driven solutions.  As the senior innovation officer, recognizing that no single approach works for every customer, Kristi leads research and development utilizing design thinking and open innovation to deliver business value for the 200+ customers that Kenco serves in North America.  Kristi is passionate about the relentless pursuit of innovation as an enabler of business growth and driver of strategic advantage. Executing on the innovation promise compels her to be a transformational agent of change.

Kristi received her BS in Organizational Management from Covenant College She is a certified Specialist in Design Thinking and Innovation as awarded by the Darden School of Business, University of Virginia.  She also received her Certified Information Executive designation from the Institute of CIO Excellence at the University of South Carolina.

Kristi serves on the Board of Directors for ChaTech, a non-profit dedicated to the promotion of technology and STEM education, is the Co-Chairman of the International Warehouse and Logistics Association Education Committee, and serves the industry speaking, participating as a panelist, and publishing articles promoting supply chain innovation.



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Welcome to "One-Off Sound-Off," a blog page devoted to guest commentary on all things supply chain. This is a space where industry leaders can share their opinions and expertise with the logistics and supply chain community. If you have an article or commentary you'd like to share, please consider sending a guest blog proposal to feedback@dcvelocity.com.


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