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Focus: RFID and Automated Identification and Data Collection (AIDC)

Feature Article from Our RFID and AIDC Subject Area - See All

From SCDigest's OnTarget e-Magazine

- March 25, 2014 -


RFID and AIDC News: As Internet of Things becomes Real, New Opportunities for Supply Chain


26 Billion Connected Devices by 2020, Gartner Predicts, Saying the Time to Start Planning is Now


SCDigest Editorial Staff

While the explosion of smart phones is obvious to all, and companies are looking at how mobility might be effectively deployed in the supply chain, the rise of the so-called "Internet of Things" (IoT) is expanding at an even faster if less obvious rate.

And that change is sure to have some profound supply chain implications.

SCDigest Says:


"Prepare your supply chain to add value in a world of connected devices where demand signals
and asset locations are visible at a granular level," Gartner says

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IWhat is the Internet of Things? The term was believed to have been created by Kevin Ashton, one of the founders of the Auto ID Labs at MIT, who has said it was the title of a presentation he gave to Procter & Gamble in 1999, though the basic concept had been around for a decade or so.

It simply means that physical items, from inventory to machinery, will be connected to the Internet, and communicate relative to some status: where it is, the environmental conditions around it, it operational health and whole lot more. The fundamental change is not only in terms of increase visibility and therefore control, but also that rather than human beings being creators of most of the information that finds its way to the web, it will be sensors and chips automatically generating much of this data.

The implications are profound yet not well yet understood.

A recent research note from a trio of Gartner analysts (Michael Burkett, Steven Steutermann, and Noha Tohamy) summarizes that potential. They start by predicting that we'll see a 30-fold increase in the number of intelligent and connected devices by 2020, to some 26 billion installed units. This compared to 0.9 billion just five years ago.

By comparison, the population of smartphones, tablets and PCs will be much smaller, at 7.3 billion by 2020.

"Combined with the Nexus of Forces (analytics, mobile, social and data), will allow customers to be served in new ways having significant ramifications for the future supply chain," Gartner writes. "Today, we see industrial equipment and patient monitoring done digitally, which has allowed these digital businesses to deliver customer outcomes. This is just the beginning of what's to come."

The explosion in the number of intelligent devices will create a network rich with information that will enable supply chains to assemble and communicate in new ways, Gartner says.

"Imagine a future where thousands of devices are connected, from the customer back through the supply chain, creating new information nodes that enhance demand and supply management," Gartner adds. "All these new devices must be designed with embedded software requiring new talent and capabilities throughout the product supply network."

In the early days of the current RFID industry, the term "automous logistics" was sometimes used , especially in the defense industry, to describe a future in which materials, people and more would be automatically deployed and synchronized to perform a given service or meet a specific need. The term seems to have fallen out of favor, but examples of the concept are starting to be seen in the real world.

(RFID and AIDC Story Continued Below)




Gartner, for example, cites Lockheed Martin's F-35 fighter jet, which is monitored by an array of connected sensors relative to the health of the aircraft. This allows Lockheed Martin to guarantee flight availability by predicting service needs and driving the service supply network. In the consumer products industry, Coca-Cola's Freestyle beverage machine allows customers to custom mix their own drinks, disrupting the traditional distribution model while also capturing valuable customer insights for future products. It also communicates to local bottlers about its inventory position.

In the end, Gartner sees three major impacts from the mainstreaming of the IoT:

An increased number of network nodes: As devices become more self-aware and communicate with their ecosystems, new possibilities are opened for the supply chain. Many more enterprise assets will describe availability, capacity and health, while inventory - such as perishable goods - can be located and even its freshness determined. Real-time availability of more granular data will improve decisions for planning, allocation, optimization and service.

Automated judgment: Making human decisions from the abundance of data available will be
overwhelming, requiring nonhuman intervention for faster decisions and to also ensure human resource capacity is available to think strategically. IBM's Watson and Google's Nest Labs demonstrate two ends of the spectrum for self-learning and automated judgment ranging from advanced science to home energy management. Supply chain nonhuman customers will decide where and when they need product or how best to use capacity.

Cyber risk increases for operational technology (OT): As OT devices connect to the Internet they are more exposed than in the past. This will require a convergence with how IT is managed. For example, what if your network of connected machines or cold chain monitoring systems are hacked?

To take advantage of this huge potential in the future, companies need to begin think about the opportunities now, Gartner says.

"Prepare your supply chain to add value in a world of connected devices where demand signals
and asset locations are visible at a granular level," Gartner says. "Teams responsible for supply chain innovation should partner with IT to understand the maturity of the IoT landscape and to look at how this may be applied to the top obstacles to your supply chain goals, such as forecast accuracy, supply chain synchronization, visibility and orchestrating the value network."

The IoT is really coming - it's time to get supply chain thinking aligned with this reality.

How dramatic do you see the IoT being for the supply chain? Ideas? Let us know your thoughts at the Feedback section below.

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