We spoke with John A. White III, president and CEO of Fortna, about the Internet of Things and the promise of supply chain visibility. He has more than 25 years of experience in supply chain systems and solutions, distribution strategy, design, implementation and operations management at a range of companies. These include Cap Gemini, Manugistics and Accenture.
NextGen Supply Chain: Supply chain visibility has been on everyone’s wish list for a long time. Yet it always seems just beyond grasp for even the most sophisticated companies with the latest technologies. What new promise does the Internet of Things bring to the visibility challenge?
White: The concept behind supply chain visibility is very straightforward. It’s a matter of matching material flow with the flow of information about it. Because it gathers data at many, many nodes in the supply chain, IoT makes it possible to synch material and information flow in ways never before possible. In addition, IoT tracks activities at key supply chain nodes, giving a real-time picture into supply chain processes too.
Now the key word here is real time. IoT is in real time. Data about processes and materials is live across the supply chain. There’s no other technology with the ability or scalability to do that. That’s the promise of IoT in supply chain visibility. It’s also a long way from the days when a shipment arrived before or at the same time as the ASN or advance ship notice.
NextGen Supply Chain: Why is this so important?
White: It’s all about the customer or consumer. By elevating accuracy as well as track and trace capabilities, IoT makes it possible to better meet if not exceed their expectations. With greater supply chain visibility, companies can be more proactive delivering to consumers what they want when they want it and where they want it. That’s key in our world today.
NextGen Supply Chain: We certainly have many new shopping scenarios today.
White: We sure do. Consider this one.
I’m in a parking lot at a big box store and use my phone to order an item online. I want to pick it up in the store and the Web site tells me I can do that. Only trouble is other shoppers in that same store have the same item in their carts. So, there’s actually a stockout and the system doesn’t know it.
Unfortunately, consumers rarely give any supplier a free pass, especially in e-commerce. Our challenge is to figure out how to build supply chain visibility to meet these and many other consumer needs. By the way, digital shelves that count the items on them would have helped in this big box store’s IoT.
NextGen Supply Chain: Had not even thought of that one. Really interesting. So, what’s going on behind the scenes to use supply chain data to better match customer expectations with reality?
White: Collecting data with IoT is only the first step. That data then has to be converted into information to be valuable and provide visibility. That requires data analytics to turn data into intelligence that actually provides supply chain visibility both upstream and downstream. Do that all in real time and you’ve optimized the supply chain and greatly improved its agility and flexibility. In other words, you’re in a much better position to respond to the needs of everyone across the supply chain.
NextGen Supply Chain: What are the challenges to making that happen?
White: Neither IoT nor visibility is for everyone. There are still plenty of companies that are operating as if they are still in the ‘80s and ‘90s. They’re using spreadsheets and maybe bar codes. Even those with more sophisticated legacy systems are going to have a tough time moving to the IoT. It’s a huge jump. And, honestly, even the most sophisticated companies are just now starting to pilot IoT to improve visibility across the supply chain.
NextGen Supply Chain: That said, how does a company know that IoT is in its future.
White: This is an exercise in prioritization. Quite simply, companies capable of taking this on have to decide what the technology as well as outstanding visibility is worth to them. What’s the return they are looking for from their investment?
Furthermore, they have to determine if the demands of IoT and visibility exceed the bandwidth of their own infrastructure. And I’m not just talking technology here. There’s also the matter of being able to manage and make use of all the information IoT will deliver. Many, many companies collect too much data now. Their systems and their people can’t deal with it all. If that’s the case, they aren’t likely to be successful here.
NextGen Supply Chain: What’s your final thought on IoT and supply chain visibility?
White: Ultimately, we are trying to get to one version of the truth about the supply chain. IoT is one route. There are others, but they don’t deliver the same intelligence. However, companies need to decide how they are going to respond to consumers in a digital age and a digital economy. If they choose to ignore that reality, they will be squeezed out. Bet on it.
Gary Forger is the special projects editor for Supply Chain Management Review. He can be reached at firstname.lastname@example.org.