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About the Author

Rich Sherman
Principal Essentialist
Trissential LLC


Rich Sherman is an internationally recognized researcher and author on trends and issues across supply chain management. He currently serves as a Principal Essentialist at Trissential LLC in their supply chain consulting practice. His book Supply Chain Transformation: Practical Roadmap for Best Practice Results (Wiley, 2012) has received praise by practitioners, academics, and non-supply chain executives as a great read on business transformation.


Supply Chain Comment

By Rich Sherman, Principal Essentialist, Trissential LLC

June 5, 2014



If You're on the Internet of Things Bandwagon, You're Playing the Wrong Tune!

Web 3.0 is the Transformation Platform to the Smart Supply Network 3.0


Sherman Says:

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Web 3.0 will fundamentally transform the supply chain from a dysfunctional chain of unconnected organizations working separately to create inefficiency into a connected "system" of networked organizations.
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The Internet of Things (IoT) is getting a lot of hype from the pundits. But, while they are correct in that the game is changing, they are missing the real change that is occurring. Supply Chain Management is at the beginning of a fundamental transformation from linear, sequential thinking and communication to a demand/supply network, systems thinking, and dynamic communication.

 

The transformation is being driven, not just by the IoT, but by a new wave of technological change that began at the turn of the century, "The Connected Age." And, connectivity is driving transformation of the Web itself.

Since the commercialization of the Internet and development of the Web in the mid-90s, we have become "wired." The impact of the Internet, however, may have been understated. As we have become wired, the "Internet of People (IoP)" has become ubiquitous to us and increasingly mobile. There are 6.8 billion people in the world and more than 4 billion have a mobile phone. That's 500 million more than own a toothbrush! We are becoming connected, yes; but, more importantly we are becoming "unwired."

Mobility has untethered us from the wired Internet. Wireless technology and access are becoming as ubiquitous as the Internet. Quite simply, it is enabling people and things to be always connected and always on nearly everywhere. According to research provided by "path to purchase" data provider Retailigence, 91% of adults have their mobile phone within arm's reach 24/7. And, the number of mobile phones that are "smart" is increasing. According to eMarketer, in 2014 there will be 1.75 billion smartphone users worldwide and will be growing to nearly half of all mobile phone users by 2017.

And, the number of mobile phone and smartphone users that use their mobile device to connect to the Internet is growing as well. In 2014 (according to eMarketer), 2.23 billion people will be using their mobile device to access the Internet. With built in intelligence, Internet access, Global Positioning Systems (GPS), and the increase of Location Based Services (LBS), the amount of available consumer market information is, well, Big Data.

You don't have to imagine it, it is happening as we speak. 81% of smart phone users have used their smart phone to conduct an on-line product search with 50% of them making a purchase with one. Retailigence, for example, enables retailers to upload their active store location inventory and pricing data to the Retailigence data base. Mobile App developers can access the data base for on line search to off line purchase applications.

As the "connected consumer" searches for a product, their location information is visible to the app which displays not only on line products, but products and prices that are in a store located within a geographic radius of the connected consumer.

 

They can order on-line or more probably stop by the store and pick up the product at their convenience, same day receipt of the product, no drones necessary.

The retailers and brand manufacturers can see who and where their products are being considered, automatically collecting "point of demand (POD)" data. Using POD data, retailers and manufacturers can push coupons or other incentives to the connected consumer to encourage them to buy their brand or shop at their location. We would call that "demand visibility" to drive delivery speed and accuracy, and supply chain planning and replenishment.

With 74% of smartphone users using their device while shopping in the store, many retailers are developing and deploying apps to allow the connected consumer to scan their products into their shopping carts and when ready, they simply "check out" providing payment information and departing the store, no checkout counter, no lines, just a satisfied customer.

For those customers without a smartphone, wireless scanners are provided by the retailer (already a growing trend in Europe). Real time "point of sale (POS)" data, store inventory update data, consumer market basket data, location data, demographic data and payment received data to name a few of the outputs. We just need a checkout ringtone; because, that should be music to the retailer's ears.

Traditionally, information on the Internet has been dependent upon people entering the data; hence, the reference to the Internet of People earlier. But, with advances in wireless connectivity and automatic data collection technologies, such as Bluetooth, RFID, sensors, monitors, readers, etc., we have been seeing the evolution and subsequent hyping of the "Internet of Things (IoT)" as suggested by Kevin Ashton in 1999. Yes, that would be 15 years ago!

What's been happening over the past 15 years?

Have you see the new "smart house" technologies that are emerging? No more wires. Using Bluetooth technology video devices, speakers, home theater systems, thermostats, appliances, anything in the household is connected to the home server/wireless hub for access by apps. The resident simply accesses the appropriate app from their smartphone or tablet to receive monitored information about what's happening in the house and can issue commands to lock doors, initiate video surveillance, speak with other residents or delivery personnel, start the coffee or microwave, turn on or off lights or entertainment systems, and the list and possibilities are growing.

All of these "things" are now connected to the Internet, automatically collecting data about the environment, health, and functions they are operating in.


While these are consumer applications that everyone can understand, the growing convergence of the Internet of People with the Internet of Things is resulting in an "Internet of Everything (IoE)" that is not only transforming the consumer world; but, it is resulting in a fundamental transformation of the commercial world and the supply chain in particular. As the pundits are noting, more and more asset management systems connect the assets to the Internet for collection and communication of location, health, and performance data.

Commercial (and passenger) vehicles are outfitted with in cab computers and telematics for monitoring and communicating location, health, and performance data. Estimates on the number of devices already connected top 10 billion and are increasing to more than 50 billion in five years or less. Sorry, Gartner, you're off by a few billion. Quite simply, there is a limit to the growth of the IoP; but, growth in the IoT is unbounded.

The IoE holds the promise of transforming the linear supply chain of the past to a transparent supply network system of channel participants driven by real time automatic data collection providing real time visibility and analytics to the information they need to adjust the flow of goods to respond to changes in the point of demand variation that is also being collected automatically in real time. The Supply Chain is getting smarter with every device that is connected.

The Web 1.0 was initially limited to the display of static pages. Web 2.0 provided dynamic, interactive, and collaborative capabilities for the IoP. We believe that the emergence of the IoE signals the transformation to Web 3.0. Much has been and is being written about Web 3.0; and, there is considerable debate about what Web 3.0 looks like within the technical community; however, simply put, Web 3.0 extends 2.0's capabilities and is ubiquitous, data driven, analytic (predictive and prescriptive), and actionable.

Well beyond the capabilities the pundits are reporting on the IoT, Web 3.0 enables advances beyond traditional supply chain management by collecting real time data and providing predictive analytics to recommend prescriptive actions to manage increased complexity and change for competitive advantage.

As we evolve in the Connected Age, the Web 3.0 is the transformation platform enabling the emergence of the Smart Supply Network 3.0 (SSN 3.0). It's an extension of the vision I painted of a Smart Supply Network in my book. Two years later that vision is becoming reality as Web 3.0 is becoming a reality.

Supply chain problems are caused from the uncertainty, time delays and amplification of variability based on linear communication of demand changes from one function to another and from one organization to another. The parts of the chain don't work together. They often work against one another. They may be linked physically; but, rarely are they "plugged" into one another.

Attempts at Supply Chain Visibility are noble; but, they continue to approach the problem from a sequential, linear view… the supply "chain" is the perceptual barrier to the solution.

Supply "chains" don't have or share data and information about the plans and performance of their operations or their changing demand/supply requirements dynamically. They are consistently "out of sync" with one another. As a system of supply responding to demand variation, they generate uncertainty, waste, cost, time delays, over and under stock, increased transportation cost, inefficient capacity utilization, and, well, you name it. In short, supply chain management is managing the complexity of a never ending consequence of unplanned events. The supply chain is a dysfunctional system that increases the cost of all participants in the system.

Web 3.0 will fundamentally transform the supply chain from a dysfunctional chain of unconnected organizations working separately to create inefficiency into a connected "system" of networked organizations supported by smart analytics that simultaneously and synchronously respond to variability to increase accuracy, visibility, and velocity all supported by an intelligent cloud hosting the business intelligence to make the network "smart."

We have to lose the notion of a "Supply Chain." Web 3.0 commerce is not a chain. It is not sequential. It is a system. It is omni-directional and omni-channel. Organizations participate in a dynamic network of other organizations to satisfy demand at a consumption point. The organizations in the network are not "links", they are nodes.

They work together in conjunction with other nodes to distribute material and information across the network to satisfy demand at consumption nodes. Connectivity is provided physically by transportation lanes and carriers. Information is provided by communications lanes (Web 3.0) and telecommunication carriers, largely in the cloud. Forget about supply chain, in the 21st century we must operate and manage a Smart Supply Network 3.0.

 


Final Thoughts


What does it look like? Simply stated, SSN 3.0 (enabled by Web 3.0's ubiquitous communications network, automatic identification and data collection, location based services, and business intelligence) provides end to end predictive and prescriptive analytics, decision support, and transparency (transcending the current notion of visibility) within the system of systems to synchronize the flow of material, services, and information to respond to demand.

 

More accurate timely data, shared simultaneously in real time, enables the organizations comprising the network to work together to optimize resources and physical flow to reduce time, inefficiency and inaccuracy, and cost while increasing service and capacity utilization to serve the demand of the connected consumer and customers across industries. SSN 3.0 is simply the way to operate and lead in the Connected Age. Break the chain, unhitch from the IoT Bandwagon, and jump on the network orchestration rocket! It's not only harmonious; it's synchronous.


Agree or Disagree with Our Expert's Perspective? Let Us Know Your Thoughts at the Feedback section below.

Recent Feedback

There is much that I agree with in this paper, however, the answer to deal with new consumer demand is the ability to have accurate and timely information.  It means that companies will have to choose to employ item level RFID to ensure that they have accurate inventory. This means that products are being tracked at each touch point. RFIDcan be used to populate the companies operating systems. If desired, the company could choose to spontaneously pass product information on to trading partners.


The interest in Omni Channel is appropriate, but unless the retailer has item level RFID, that can provide reliable product information that can be used to make a commitment to a customer, OC will not be successful.


I am personally convinced that the sophisticated supply chain that we developed at Nabisco, could have been so much more successful had we had the ability to employ item level RFID. To that point, I am convinced that forecasting accurracy could be dramatically improved with accuate and timely product information;al la item level RFID.  My experience with this technology was with the pilots that were conducted with Macys, Dillards and JCPenney. We collaborated with Bill Hardgrave and Justin Patton, who actually managed the pilots. There was a plethora of information that was developed, including the problems with inaccurate information, that had gone on without being recognized. 



It's now time to conduct the reseach to determine the benefit of Item Level RFID to the supplier!  when this research is completed and implementation begins, the market for RFID will grow tremendously.  More importantly, we will see the USA achieve the important role of superior supply chain manager, resulting in moving to on shoring/ increased manufacturing. The time is now.
cheers, joe





 


 




 


joe andraski
founder
collaborative energizer llc
Jun, 25 2014

With an experience base of more than 30 years, primarily in supply chain, I really enjoyed reading this. I absolutely agree with the perspective as to a limited perspective of the Internet of Things (IoT). OMG, "There are 6.8 billion people in the world and more than 4 billion have a mobile phone." This already has had an astounding impact on the supply chain industry, a paradigm shift, but as I've said to a number of folks recently, "You ain't seen nothing yet!" I love the concept of the Internet of Everything (IoE) but you are missing a key component of the Internet of People (IoP). It's not merely are they wired or not but how they communicate and collaborate both as consumers and in business that will have astounding impact on the supply chain. Because of the increasing pace of change and growth in technology and information, the ability to do so face-to-face as well as across our professional, social and virtual communities is not to be minimized as we see with the current focus on the Omni-channel.


Sandy Vosk
President
ATS, Inc
Jun, 26 2014
 
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