If there is a sector in today’s marketplace, where Internet of things is ready to schedule a shake, that’s the industry. In fact, the impact in the supply chain alone is expected to be so large – Cisco and DHL estimate more than $ 1.9 trillion1 – that the Industrial Internet of Things (IIoT) has even got its own moniker. Still, that’s not to say that IIoT will lead to overnight success for today’s industrial manufacturers and other members of the connected supply chain. Far from it.
In a world where most companies still use a mix of legacy legacy systems, new technology, and connected and non-connected assets, it will take a while for IIoT to take full effect. Does that mean it’s not worth the investment? Of course not. But it does mean that your business will face challenges as you prepare for the inevitable plunge into the logistics world of IIoT. The following are just a few.
Challenge # 1: Internal battle between operational management and IT teams
This is nothing new. With any major technological disruption, companies have to deal with a management problem. There is likely to be some struggle between the operational management team and the IT team when it comes to buying IIoT devices for the connected supply chain. Many IT professionals may want to buy the latest technology as soon as it hits the market, but operational management teams may not want to spend the money.
With IIoT, this is especially problematic as operational teams are used to buying technology that can last for years, if not decades. But IIoT devices are unlikely to last for years, validating your IT team’s desire to buy new technology. You will need to strike a balance between purchasing new technology and using existing technology. The decision is likely to come down to whether a new IIoT device will solve a problem or have a greater impact on employees and processes.
For example, the IIoT is set to eliminate barcode scanners by replacing UPC tracking with RFID technology and cloud-based GPS sensors that will be able to track the location of objects immediately in a warehouse. It makes sense to upgrade to this technology right now because of the efficiency that new RFID sensors will provide. But what happens in a year when new and potentially better GPS tracking software or RFID sensors are available?
Most companies will need to do a cost-benefit analysis using both IT and operational management teams to determine if (and when) a new upgrade would have a worthwhile impact. In the end, I think that risking waiting for what’s next at this point is a risky proposition. I recommend investing in flexible architectures that allow for a more agile approach to change given how quickly technology is changing and will continue to change in the future.
Challenge # 2: Skills are complex – and lacking
The chances are good that you are dealing with a very diverse employee pool – boomers who are ending their careers in manufacturing and millennials just entering the workforce. All of them want their own learning curve when it comes to preparing for the complex processes of IIoT – and their own willingness to introduce it.
Yes, IIoT is meant to simplify and make Production and connected supply chains more efficiently. But adopting IIoT also means sacrificing quality control processes by relying on sensors and machines to determine when machines need scheduled maintenance, and using data to make decisions previously made by humans right on the factory floor. It is a complete change from the way the company has done in the past.
Offering training courses and compensation to continue education will prove to employees that they are just as needed now as they were before technology changes were implemented. Management can help change the mindset by assuring employees that they are not obsolete in the connected supply chain.
Challenge # 3: Handling and analyzing all data
One of the most important assets of IIoT is arguably the exponentially larger amount of data it provides. And while this data may certainly contain valuable information nuggets for the connected supply chain, simply collecting the data is not enough.
Raw data collected from sensors throughout the supply chain may be incomplete, inadequate or inaccurate. Not to mention that today’s supply chain not only includes data from sensors and other connected systems and processes. It also tends to include data from offline processes and partners that are not yet running fully digital operations. And consider data from traditional ERP systems versus the unstructured data coming from social media sources.
All of this nonsense data needs to be accounted for and managed if a supply chain player expects to make quick, informed decisions, resolve potential issues and leverage the full value of the data. Implementing this requires much more than basic data access. It requires the use of data integration, data quality, data management and other important data management capabilities to handle all the data that is part of the supply chain. Only when this happens will affiliate supply chain players be able to rely on sophisticated analytics to reveal insights that inspire smarter decisions, plus the potential for much-needed competitive advantage.
Still less than 2 percent2 of executives feel they have a clear vision of how to implement IIoT on a large scale across the supply chain. Connected supply chain managers need to ask: Do we have an analytical process – and the right people and technology – in place to use all this data? Do our teams know the right questions to ask – and the right trends to look for in all the new sources of real-time data?
A balancing act for the connected supply chain
This is an incredibly exciting time in digital revolution. Those in the industrial market are ready to reap many of the benefits of IIoT if they have the patience and passion to weather the immediate challenges. As I’ve noted before,3 there is so much to gain and very little to lose for those willing to jump head first to secure a competitive edge.
Consider Maersk Line,4 which is one of the world’s leading shipping companies. It added sensors to its refrigerated shipping containers that transmit important information – such as temperature and location – to a central hub. A team of employees can now deal with problems as soon as they occur, regardless of the container’s location. As a result, containers require less manual inspection and arrive at their destinations with consistently fresh produce.
Yes, more than 30 percent of CEOs believe there is a huge skills gap in their companies when it comes to IoT readiness. Yes, security will continue to be an important issue in connecting so many different parts of your company’s infrastructure to the digital world. But from my point of view, the greater risk lies in what will surely be an unprecedented period in supply chain management. We’re not talking barcodes anymore. No more manual inspections. No more lost cargo, over-produced production, machine downtime or delays in parts. We are talking about the most efficient manufacturing and connected supply chain this world has ever seen.
About the author
Daniel Newman is the principal analyst for Futurum Research and CEO of Broadsuite Media Group. He works with the world’s largest technology brands exploring digital transformation and how it affects the business. He is regularly cited in CIO.Com, CIO Review, CNBC and hundreds of other sites around the world. Newman is a five-time best-selling author, including Building Dragons: Digital Transformation in the Experience Economy, and is also a contributor to Forbes, entrepreneur and the Huffington Post, and a graduate professor.