CSCMP's Supply Chain Quarterly
December 12, 2018
Forward Thinking

Warehouses are improving efficiencies with "Internet of Things," AT&T executive says

To justify the cost of expensive sensors and data networks, companies will need to understand where the data will provide a strong return on investment, the IOT expert said.

Despite high installation costs, warehouse operators are broadening the deployment of the "Internet of Things" as they find ways to make the networked sensors pay off, an AT&T expert says.

The Internet of Things (IoT) is loosely defined as a network of physical objects, sensors, and other information sources that automatically exchange information with a central database. In logistics, IoT users are inspired by the promise of improved visibility across the supply chain, which could allow them to track items such as containers, pallets, and packages, as well as the trucks, forklifts, and conveyors that move them.

However, installing an IoT network in a warehouse requires purchasing expensive sensors, building data networks, and hiring consultants with specialized expertise to design and implement the platforms, said Mobeen Khan, AT&T's assistant vice president for IoT Solutions. "It is still somewhat complex to set up, because you need devices, connectivity, and a network," Khan said in a recent interview. Given the high up-front costs, "it is most important to understand where this data will add value and generate strong ROI," he said.

As a telecommunications carrier, AT&T supplies connectivity through cellular, satellite, and Wi-Fi channels, as well as consulting services and software-development tools.

Once an IoT network is operating, businesses can begin recouping their investments in many ways, according to Khan. For example, a food and beverage company could rescue perishable goods from spoilage, or a manufacturer could charge a premium to retailers by guaranteeing shipment quality, documenting the cargo's complete chain of custody, he said.

Gains could come from improved visibility across the shipping and warehousing functions, he said. Users could also benefit from better visibility into temperature settings, battery charges, fuel levels, security systems, and even data from what Khan termed "soft sensors," such as weather reports or stock prices.

"We can track a supply chain anywhere in the world," Khan said. "If you're manufacturing in Vietnam, warehousing in Germany, and have end customers in Canada, we could help you could track that all. Connectivity is the fundamental anchor."

Other users analyze the mountains of data produced by an IoT installation to discover wasteful patterns, such as lights burning overnight or conveyors running empty. Solving these can generate returns through reduced utility consumption, higher worker productivity, and trimmed material handling costs.

As companies discover news ways to apply the IoT strategy to the supply chain, an increasing number of manufacturers have begun to use the new technology, according to a 2015 poll from IT firm Zebra Technologies Corp.

Ben Ames is Editor at Large and a Senior Editor at Supply Chain Quarterly’s sister publication, DC Velocity.

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