The positive impact of continuous IoT-enabled connectivity on supply chains

2021/04/16 Innoverview Read

Despite the incredible sophistication of global supply chains, billions of dollars of food, fuel, medicines, and goods continue to be lost each year. Perishable items are sent to the wrong location and criminal gangs syphon off valuable goods or replace them with counterfeits, by exploiting the weakest links in the supply chain.  

Without real-time data, inbound goods are easily decoupled from outbound and case studies suggest that between 10-30% of Returnable Transport Items go missing. Further, BCG estimates a loss of 1.6 billion tons of food annually, worth $1.2 trillion, with half due to loss, damage, theft or spoiling. 

This wastage can only be reduced by using IoT to streamline operations and enable real-time continual monitoring of individual goods or even packages of goods through a ‘Continuously Connected Supply Chain.’ But what would this look like, what is the global opportunity that connected supply chain brings to business, and what are the required steps business must take to enable it? 

What is a continuously-connected supply chain? 

The Continuously Connected Supply Chain revolves around one single solution: attaching a discreet IoT device that tracks goods in real-time, transmitting critical data such as temperature and location, allowing for an alert or notification to be sent the moment any of the necessary parameters cannot be met. 

Currently, only vehicles and shipping containers connected through GPS trackers give any oversight of where items are at different points in the journey. But thus far the tracking of individual goods has yet to materialise; without access to this real-time data, inbound goods can be easily decoupled from outbound. In the absence of individual product tracking some businesses also become victim to criminal activity and miss the opportunity to take corrective measures through the rapid responses or systemic changes that tracking through IoT permits.  

In some limited very high value use cases, IoT-enabled monitoring is already underway. For example, the new COVID-19 mRNA vaccines, which require very low temperature storage, are transported in special £5,000 ‘suitcases’ which justify the cost of individual trackers.  

However, it is the lower value items that comprise the vast majority of supply chain products that are the most vulnerable to crime or loss. The good news is that viable business cases are now starting to emerge for IoT-tracked boxes, roll cages, and pallets.  

The global opportunity of connected supply chains 

Anecdotes abound around the consequence of blind spots in supply chains. UK supermarkets regularly lose products in transit or receive wrong deliveries. For example, one major UK retailer recorded losing 15% of its roll cages, finding that many ended up in competitors’ car parks, in some cases in entirely different countries to their intended destination. 

Spoilage is another key problem, where food and medicine packages must be kept under the right temperature conditions (currently, a crucial element to the international transportation of COVID-19 vaccines in the ‘cold chain’). And here, it is only through real-time access to data that organisations might spot problems as they occur and make better informed decisions about required systemic change. 

Undertaking food recalls due to contamination in transit is another issue which can cost businesses millions and result in far-reaching damages to both brand reputation and consumer trust. Here, real-time tracking via IoT would deliver a continuous audit of products in transit and would enable businesses to identify specific batches for decoupling, reducing loss and informing on the required next steps. 

Connectivity and cost challenges 

Monitoring devices require sensors to provide data about the state of those goods (across temperature, tilt or tamper) and seamless connectivity to transmit this data to the cloud across multiple networks. But many roaming SIMs are designed to connect in the cheapest way, rather than the best, and often expose shipments to numerous connectivity blind spots throughout the journey. 

Further, with SIMs frequently thrown off networks, it is imperative that devices are designed to spot when this happens and quickly recover to ensure connectivity for the rest of the journey.  

As a rough estimate, tracking a ‘Returnable Transport Item’ such as a roll cage costing hundreds of Euros, would cost £2-3 per month per unit. Therefore, when tracking thousands of pounds of pharmaceuticals that might be stolen or spoilt, spending even as much as £10 per month per batch is viable. However, as the cost of the package in transit comes down, the case becomes harder to make.  

Bayer’s printable and flexible cellular-enabled NB-IoT-based smart label costs around €2 and can be attached to anything that leaves its warehouses. This is currently cutting-edge technology but by 2022 we anticipate a series of large-scale initiatives in this space. 

Getting ready for the continuously-connected supply chain 

Continuous real-time monitoring of supply chains is a future ambition, but it is getting close, and many elements of it are already delivering value to those who have taken the leap. 

Early investments in this kind of tracking infrastructure will bring immediate benefits for business dealing in higher value goods and, as supply chain monitoring services become increasingly feasible, those who moved early to establish the infrastructure will be able to more easily integrate them into their processes, stealing a march on their competitors and emerging as disruptive technology leaders.