Internet of Things in Supply Chain Logistics: How Much Progress?”

By connecting the previously unconnected, IoT enables businesses to improve the speed and accuracy of decision-making — which in turn can dramatically improve the flow of goods up and down a supply chain.

What is the Internet of Things  (IoT), and why is it considered to be such a big deal?  One way that experts answer that question is to say that ‘we are only at the beginning of the IoT revolution’  But what is IoT? While definitions vary, perhaps the simplest way to think of IoT is to consider it as the networked connection of physical objects. With the advent of IoT, Internet connections now extend to physical objects that are not computers in the classic sense and, in fact, serve a multiplicity of other purposes.

Gartner and other analysts have concluded that, by 2020,  IoT devices will account for 83% of all internet connections. But today, in 2017, the data says that IoT is a big deal already – but will only get bigger.  So far, less than one percent of all physical objects that could be connected to the Internet are currently connected. By 2020, Cisco estimates there will be more than 50 billion devices connected to the Internet. By that time, computers (including PCs, tablets, and smartphones) will represent just 17 percent of all Internet connections; the other 83 percent will result from IoT, including wearables and smart home devices.

Today’s supply chain logistics industry is at an inflection pint, which means that the optimal conditions now exist for IoT to take off. The rise of mobile computing, consumerization of IT and sensor technologies, 5G networks, and big data analytics are “pushing” adoption of IoT solutions. Logistics providers and their customers are also “pulling” adoption by increasingly demanding IoT-based solutions such as:

* optimization of efficiency and network utilization

* transparency and integrity control (right products, at the right time, place, quantity, condition and at the right cost) along the supply chain

* detailed shipment tracking to have transparency in real time.

IoT in the logistics industry ultimately comes down to two important capabilities: “sensing” and “sense-making”. “Sensing” refers to the monitoring of different assets within a supply chain through different technologies and mediums, while “sense making” is the handling vast amounts of data sets that are generated as a result, and then turning this data into insights that drive new solutions.

Traffic and Fleet Management: Operational Efficiency  

Optimizing asset utilization to drive greater operational efficiency is at the very heart of IoT’s value.n one study It accounts for roughly 25 percent of the total IoT value to the industry. Vehicles are among the assets most ripe for improved efficiency, especially in terms of traffic and fleet management. In-vehicle telematics and vehicle-infrastructure integration have been vanguard applications in the use of sensor data. And automotive manufacturers and transportation operators have invested substantially in connected vehicles, including “recovery” systems, such as LoJack, and in-vehicle driver services, such as General Motors’ OnStar. With IoT, traffic and fleet management applications herald a new wave of efficiency gains.

One example is the Seoul City Transportation Information Center (TOPIS), which evolved from a bus management system created in 2004. It is now responsible for providing efficient public transportation services through managing and gathering information on all public transportation in Seoul, excluding traffic signals. The TOPIS Center gathers data from streets, buses, taxis, and citizens using GPS devices, loop detectors, road sensors, video, and citizen reports. This data enables a scientific approach to transportation management policy. Travelers have access to bus arrival times 24 hours a day, enabling them to schedule their routes and choose which buses to ride. The system has increased transit efficiency, reduced traffic, improved uptake of transport services through clear communication to the public, and raised customer satisfaction.

Fleet management is equally crucial at the Port of Hamburg, which is the second busiest port in Europe. Its “smartPORT” initiative has raised efficiency and prepared the port for additional growth. The overall goal is to maintain, modernize, and improve the Hamburg Port Authority’s IT infrastructure to support efficient operations and economic development while minimizing the impact of traffic on local citizens. An IoT-based approach coordinates all aspects of harbor operations impacting ship, rail, and road traffic. So far, the Hamburg Port Authority has installed more than 300 roadway sensors to monitor traffic in the port area and to track wear on bridges. Digital signs and mobile apps give drivers traffic and parking information. Sensors also extend to waterways (using radar and automatic identification systems to coordinate ship traffic), and a solution that integrates roadway traffic data to help manage traffic disruptions that may occur when ship traffic requires bridge closures around the port area.

Equipment and Employee Monitoring: Safety and security

Monitoring of equipment and people to increase safety and security is one of IoT;s major value propositions. Consider just two examples: Union Pacific; Dundee Precious Metals.

Union Pacific, the largest railroad in the United States, uses IoT to predict equipment failures and reduce derailment risks. By placing acoustic and visual sensors on tracks to monitor the integrity of train wheels, the company has been able to reduce bearing-related derailments, which can result in costly delays and up to $40 million in damages per incident. By applying analytics to sensor data, Union Pacific can predict not just imminent problems but also potentially dangerous developments well in advance. Over 20 million temperature readings per day are sent to the Union Pacific data center; on average, three railcars per day are identified as exceeding a safe threshold of some kind. Train operators can be informed of potential hazards within five minutes of detecting anomalies in bearings or tracks.

In the case of Dundee Precious Metals (DPM), equipment monitoring and employee safety go hand in hand. DPM is a Canadian mining company that operates Europe’s largest gold mine (located in Bulgaria). For the company, IoT is about information-enabling a mine. Mining is not generally seen as an information-heavy industry — the process of mining is much the same today as it has been for the better part of the past century. Although there may be hundreds of personnel underground at any given time, not a lot of information typically comes out of a mine. Reports tend to be paper-based and issued after miners and supervisors come off shift every eight hours. This creates all kinds of inefficiency in terms of how the mine is run, and operating “blind” can compromise worker safety.

DPM is using IoT to connect its end-to-end mine operation, including vehicles, mobile devices, cameras, programmable logic controllers (PLCs) on conveyor systems, lights, fans, power, and more. Supervisors can track equipment and minor movements throughout the mine. The mine’s blasting system is integrated with location-tracking applications to ensure the blast site is cleared of personnel and equipment. The result is greater safety for miners and increased mine production — from half a million tons up to two million tons per year.

Recognition and Context-awareness: A New Experience  

IoT will be instrumental in creating exciting new experiences for many types of customers, in many different settings.

With IoT, we are seeing a proliferation of customer recognition capabilities in retail that enable new experiences via apps and connected products.

The Dandy Lab is an innovative British retail shop, powered by IoT, which bills itself as “the world’s first talking store”. Technology in the store enables customer recognition throughout, driving intelligent, context-aware interactions that create a unique shopping experience.

Mondelez, the maker of snack food products such as Cadbury chocolates and Oreo cookies, is introducing a “smart shelf ” that combines sensors and analytics to create intelligent advertisements and offers based on the gestures, physical characteristics, and dwell times of consumers in front of their displays. This also impacts operational efficiency for retailers by optimizing restocking, checkout processes, and staffing.

Becoming a “Service” Provider: New Business Models  

IoT is empowering organizations to move into adjacent markets and monetize their assets in new ways. This involves sensor-enabling core aspects of the business to generate new insights that are of value to customers. Manufacturing, engineering, high tech, utilities, and other asset-intensive sectors are now evolving to comprehend business models that monetize these insights “as a service” through dynamic pricing and payment plans.

This can often imply a fundamental transformation for the organization — how the company goes to market (i.e., channels), what it sells, the kinds of employee skill sets required, and more.

Insurers use IoT technology to create new business models that reduce guesswork, subjectivity, and a reliance on aggregated historical data in actuarial processes and for setting premiums. Sensors are connected to a car’s onboard diagnostics port and data is captured on variables such as average speed, distance traveled, times of day traveled, the frequency of hard braking and cornering, and the deployment of an airbag. Some insurers also equip car sensors with global positioning systems (GPS) to track location, although this is less common due to consumer and regulatory concerns about privacy. By having a more objective measure of an individual consumer’s behaviors, and the risks they pose, insurance carriers can more accurately price risk.

For consumers, they can convert what is normally a fixed cost for auto insurance to a variable cost that changes according to behavior (to increase user acceptance, many insurers also guarantee that rates can only go down for consumers using “pay-as-you-drive” services). Several providers enable customers themselves to receive alerts when a car is speeding (for example, a parent could be alerted if their teenager is driving the family car too fast). Insurers offering pay-as-you-drive services include Aioi Nissay Dowa Insurance Company of Japan, General Motors Assurance Corporation (GMAC) and many others.

Case Study: Transwestern / Real Estate Industry - Transwestern’s 95,000 sensors in one office property generates energy usage data which the company can share with its customers to lower their consumption

Case Study: Aioi Nissay Dowa (Japan) / Auto Insurance  - Sensors connected to a car’s onboard diagnostics port capture data on the several variables that are most predictive of driving risk, allowing a variable or “pay-as-you-drive” rate to consumers based on actual usage.   

IoT is Evolving – More Rapidly than Expected

What are some of the key use cases for IoT in the logistics industry specifically, and what will be their implications? With millions of shipments being moved, tracked, and stowed by a variety of machines, vehicles and people each day, it is no surprise that logistics and IoT are a great match.

IoT promises far-reaching payoffs for logistics operators and their business customers and end consumers. These benefits extend across the entire logistics value chain, including warehousing operations, freight transportation, and last-mile delivery. And they impact areas such as operational efficiency, safety and security, customer experience, and new business models. With IoT, we can begin to tackle difficult operational and business questions in exciting new ways.

But just how nascent is IoT in logistics? Many of the technologies behind IoT — including sensors, microprocessors, and wireless connectivity — have been in use in various logistics applications for a number of years already. Indeed, the logistics industry was among the first adopters of IoT technologies in operations.

What are some of the use cases for IoT in logistics within the bounds of warehousing operations, freight transportation, and last-mile delivery?

Warehousing Operations: The Warehouse as a Value Driver

Warehouses have always served as a vital hub in the flow of goods within a supply chain. But in today’s economic climate, they also serve as a key source of competitive advantage for logistics providers who can deliver fast, cost-efficient, and increasingly flexible warehousing operations for their customers.

With thousands of different types and forms of goods being stored in the average warehouse today, every square meter of warehousing space must be optimally utilized to ensure specific goods can be retrieved, processed, and delivered as fast as possible. The result is a high-speed, technology-driven environment that is ideal for IoT applications. From pallets and forklifts to the building infrastructure itself, modern warehouses contain many “dark assets” that can be connected and optimized through IoT.

Case Study: Swisslog’s “SmartLIFT” technology— Forklift sensors combined with directional barcodes placed on the ceiling of the warehouse and WMS data to create an indoor GPS system that provides the forklift driver with accurate location and direction information of pallets. A dashboard for managers shows the real-time speed, location, and productivity of all forklift drivers and inventory.  

Case Study: Ravas smart forks technology— Smart forks incorporate weight scales and load-center measurement technology for pallet trucks. An alert is sent to the driver when load capacity has been exceeded or when the load center is uneven.

Case Study: Locoslab connected workforce— Precise localization of mobile devices in indoor environments using active and passive RFID technology monitors the movement of people and objects within an indoor environment and applies location analytics to understand where processes can be improved.

Inside this graphic (“IoT that Lights Up Warehouse Assets”) are some of the key elements which would be present, ideally, in a smart system:

1, 2, 3: Tags on each pallet transmit package data at the inbound gateways, while in inventory, and during outbound delivery.

4. Sensors on a sorting machine detect levels of physical stress by measuring throughput or temperature

5, 6, 7. Sensors, actuators, and radar/cameras on forklifts and other objects communicate with each other and scan the environment for dangers

8. Sensor-embedded wearables allow workers to share information and interact with machines

9, 10. Sensors connecting HVAC and utility networks optimize energy consumption

Experts now expect IoT to provide the next generation of track and trace: faster, more accurate and predictive, and more secure.  Firstly, the facts are stunning: Freight-Watch recorded 946 cargo theft incidents across the USA in 2012 and 689 in Europe,37 with organized crime targeting ports and rest areas. Theft costs shippers and logistics providers billions of dollars each year, from the impact of inventory delays as well as the cost of stolen goods. Through their use of IoT, logistics providers will gain clear visibility on the movement of goods — meter by meter and second by second — as well as item-level condition monitoring to ensure that goods arrive in time, at the right place, and intact.

Case Study: Algheera open platform - The open platform consolidates data from multiple sources’ data streams, such as trucks, into one easy-to-use portal with worldwide accessibility. Logistics providers and customers can track all assets together.

Case Study: MoDe (Maintenance on Demand) - In 2012 the EU-funded a research project to create a commercially viable truck that autonomously decides when and how it requires maintenance. Sensors in oil and damper systems collected data to be transmitted from a maintenance platform for analysis. Increased vehicle uptime by up to 30-40% and decreased potential danger to truck drivers. 

Case Study: Caterpillar driver monitoring - Camera solution senses the driver is losing attention on the road. Activates audio alarms and seat vibrations if sleepiness is detected.

Inside this graphic (“Connecting Freight with Vehicles and Drivers”) are some key elements:

1, 2, 3: Multi-sensor tags on individual items and in-vehicle telematics transmit data on location and condition and on if a package has been opened (i.e., stolen);

4, 5. Telematics sensors measuring vehicle conditions such as engine temperature and performance send data first to a central unit in the vehicle through wireless, then to a central data warehouse for analytical processing to predict maintenance needs;

6. Infrared cameras capable of operating in the dark and through glasses monitor driver fatigue level through pupil dilation and blink frequency, activating an alarm if necessary.

Last Mile Offers Unique Business Opportunities for Creative Logistics Providers

Last Mile is a complex combination of labor and vehicle assets with local routes and customer interactions   With the final part of the delivery journey (the so-called “last mile”) being highly dependent on labor, and as consumer demands become more sophisticated and delivery points continue to multiply, logistics providers face new challenges. They need to find creative new solutions for this important stage in the supply chain – cost-effective solutions that provide value for the end customer and operational efficiency for the logistics provider. IoT in the last mile can connect the logistics provider with the end recipient in exciting ways as it drives dynamic new business models.

If this level of detailed information becomes available for a single product, logistics providers in the last-mile could have much greater transparency on the contents of a parcel (assuming the customer allows it). They could understand, for example, if an item requires specific attention to temperature or if it is particularly fragile. This would, of course, add complexity to delivery but it would also create an opportunity for logistics providers to increase service standards for customers and end consumers.

Inside this graphic (“IoT in the Last Mile”) are some interesting elements:

1: Sensor inside the mailbox detects mail and messages the customer that the package is delivered

2, 3. Smart home wireless sensors in home appliances and replenishment buttons automatically place orders in anticipatory replenishment

4. In the future, customers may be able to opt-in to mobile location tracking with their logistics provider, allowing flexible delivery when they are not at the delivery address

5, 6. Sensors tracking vehicle locations and routes can also be leveraged to for additional monetization opportunities, such as return trip services

The progress at DHL

Alethia was a German government-funded project run by DHL, Fraunhofer IIS, and other partners to create a wireless sensor network system that enables seamless, end-to-end tracking of items for different transport modes. Various sensor nodes on item and asset level were combined in a sensor network. This network can safeguard the integrity of goods in transit, checking location, temperature, humidity, and shock.

The DHL SmartSensor offers full-condition monitoring. This intelligent sensor can monitor temperature and humidity, while also indicating shock and light events, to ensure complete integrity during transportation.

The DHL Resilience360 Supply Chain Risk Management Portal provides a multi-tiered visualization of the end-to-end supply chain. Any disruptions on a global scale are checked for their effects on key trade lanes; if they pose a strong risk, appropriate mitigation strategies are triggered automatically. In the future, Resilience360 could integrate all the data transmitted from assets and respond when a truck carrying urgent cargo is about to break down or when a warehouse has been flooded from a storm. It could also move a shipment from air freight to road freight to compensate for an airline strike.

The DHL Paketkasten or Parcelbox is a solution to accommodate the e-commerce boom – users can install a personal parcel locker at their front door. This is currently being launched in Germany.

SemProM (Semantic Product Memory) was a co-research project between DHL, DFKI, and other partners to create a digital product memory or “Smart Labels” for a product. The smart items can store product-related information over the whole product lifecycle and make it possible to control various business processes with this information. For example, production processes are controlled without access to backend systems by production routing stored directly on a work-piece RFID tag.

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What we know today is this: To successfully implement IoT in logistics will require strong collaboration, along with high levels of participation between different players and competitors within the supply chain, and a common willingness to invest. The shared end goal will need to be creating a thriving IoT ecosystem.

According to Rob Siegers, President Global Technology at DHL Customer Solutions & Innovation: “To derive significant commercial value from IoT will ultimately depend on how well-connected assets, such as containers or parcels, are networked along the entire supply chain.

Important questions remain about the future of IoT, particularly in the realms of work, security, and privacy. IoT presents many opportunities for automation, and this is likely to change how some logistics jobs are performed.

In addition, connecting what has been previously unconnected may, in some circumstances, highlight new security vulnerabilities. As we interconnect IT and OT, for example, there may be new points of ingress for hackers, cyber criminals, terrorists, mischief-makers and others who wish to do harm. It is therefore vital that all actors within the supply chain, including governments and the high-tech industry, collaborate to ensure IoT security is prioritized on technology agendas in the coming years. All will need to devote significant financial and human resources to counter wrongdoing. Indeed, if IoT is to reach its full potential, it will be essential to address the legitimate concerns of citizens and policymakers about the privacy and control of personal information.

Over the next five years, humans will more than triple the number of “things” connected to the Internet, growing them from 15 billion today to 50 billion by 2020. Still, 50 billion represents only a tiny fraction of what could be connected — something on the order of 3 percent of all connectable things.

The sizzling pace of innovation in recent years, particularly the proliferation of embedded sensor technology, wearables, and apps, has already caused an incredible change in just a few short years. But what will the world of logistics look like when not 1 percent of things, or 3 percent of things, but 30 percent of things are connected? As we reflect on these developments in the context of the Internet of Everything, it is clear that we are just beginning to connect the unconnected.

When we connect the unconnected— when we light up “dark assets” — vast amounts of information emerge, along with potential new insights and business value. A connected shoe, for example, can tell its owner (or a researcher, or a manufacturer) the number of footfalls in a given period of time, or the force with which the foot strikes the ground. A connected street light can sense the presence of cars, and provide information to drivers or city officials for route planning and to optimize the flow of traffic. A connected forklift can alert a warehouse manager to an impending mechanical problem or safety risk, or be used to create greater location lligence of inventory in the warehouse.

Of course, IoT also includes more consumer-oriented devices, embedded technologies, and apps. An important element of this is the incorporation of controllers and actuators (Arduino is a well-known example), so that an action taken in the digital world, such as a user clicking a link in an application, can result in a corresponding action in the physical world (e.g., an alarm sounds, a lever flips, an assembly line comes to a halt).