Sensors, IoT and Supply Chain


Some years ago, when I was finishing a course about Oil & Gas industry technologies I wrote about Digital Oil Fields projects. At those projects the Oil & Gas Industry started to use sensors to meter temperature and pressure at Oil rigs & risers, generating data to be analyzed, stablishing present and predicting future behaviors.  Usually the use of those sensors were supported by Oil Gas private networks installed at the rigs.

Some years later, after the evolution of the network infrastructure and the vertiginous decreasing price of sensors, they have reached a lot of industries, including disaster relief, transportation, agroindustry, healthcare, procurement and also has spread to our vehicles, homes, etc.

Seeing this evolution, The Gartner Group and other market players stablished a concept called IoT. 

“The Internet of Things (IoT) is the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment.” Source: Gartner Group.

Nowadays sensors can measure temperature, pressure, motion, humidity, sound, position, vision, chemicals, etc.  They can use Wi-Fi, Bluetooth or RFID to transmit their data to a message receiving system. 

The message receiving system can connect to an ERP On Premise or Cloud, like SAP ECC or SAP S/4HANA, to the Cloud (SAP Cloud Platform) or to an App (for example SAP Connected Goods).

Much of the data generated by the sensors will remain near their origin (Edge concept) and according some researches only 15% will be directed to an analytic process.

Now we can connect technologies like IOT, Cloud Platform, Big Data, Analytics, Machine Learning and AI to help businesses to have insights and take right actions.

The use of Sensors & IoT also bring benefits in the Supply Chain processes and ecosystems. 

For example, if you add location & asset tracking capabilities to the goods that are flowing between buyers, suppliers and manufacturers you will gain more visibility and knowledge about the logistics operations that would be used to reduce costs and bottlenecks.  If you also add identification capabilities to the goods at the companies’ warehouses, you can turn the forecast and physical inventory into a simple process, improving the company operations.

When we think about Supply Chain Contract Manufacturing processes, clearly there are 3 points that IoT could be added to improve results. First on the Forecast Collaboration process where the Buyer sends his Inventory status to the Contract Manufacturer (CM).  In this case IoT could be used to expedite the physical inventory process.  The other 2 points are related to the shipment of components from Buyer to Contract Manufacturer and shipment of the finished goods from Contract Manufacturer to the Buyer. Both logistics processes could be improved if we add IoT capabilities to these flows.

Thanks and see you in the next post !!!



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