Welcome to the age of “Smart”. Smart phones, smart refrigerators and smart cars are just a sampling of what’s occurring in society. This “Smart” phenomenon, known as the internet of things (IoT), has permeated into consumers’ lifestyles into such items as watches, phones, and even clothing. It has also spread into business-to-business transactions and, yes, even the warehouse.
Internet of Things
There are many definitions for the IoT but perhaps one of the most succinct is from the McKinsey Global Institute which defines IoT devices as those that “can monitor their environment, report their status, receive instructions, and even take action based on the information they receive.” McKinsey further notes that there are three basic components that make a “thing” or device part of the IoT:
- Sensors to track and measure the activity that is taking place.
- Connectivity to the Internet is contained in the object itself, a connected hub, a smartphone, or a base station.
- Processors that enable the object to have at least some computing power.
Yes, as you can imagine, the size of this market is difficult to grasp. According to Gartner, there are about 4.9 billion “connected things”. In the next five years, that is projected to be 25 billion. Meanwhile, research firm IDC expects the global Internet of Things market will grow to $1.7 trillion in 2020 from $655.8 billion in 2014.
One thing is for certain, the growth in IoT-enabled devices has been fueled in part by the declining cost of sensors, connectivity, and data processing power. The software needed to analyze this data has also improved and companies are using it to enhance operational efficiencies and seek out new business models.
The Smart Warehouse
Some of the biggest gains in operational efficiencies are being noted in warehouses by way of IoT. A Zebra Technologies survey noted that 7 out of 10 supply chain decision-makers plan to increase their use of technology to create smart warehouses by 2020.
Devices, sensors, and radio-frequency identification (RFID) tags can enable warehouse managers to know the exact location and progress of any product at any time. “Hands-free” wearables can allow workers to move about and access information and instructions from anywhere in the warehouse without being limited by workstations. Additionally, IoT can reduce the use of manual labor, increase speed and shipping accuracy, and provide visibility into inventory and supply chains. Indeed, perhaps the two biggest and immediate benefits of IoT in the warehouse are:
- Tracking and monitoring shipments in real time using a combination of sensors and connected devices can significantly enhance a company’s ability to optimize efficiency.
- Automatically recognize the need to order and restock a product helps reduce the need for human interaction.
Another big benefit of IoT is that of fleet management. Equipping fleets with sensors designed to improve vehicle performance and diagnostic capabilities can extend the life of fleets. The sensors can collect data on such activities as location tracking and tire-pressure monitoring to make fleets not only more efficient, but also safer.
MIT scientists predict that by the end of this decade, between 20 and 50 billion products will be connected to the Internet—all of them designed to make life easier for us; however, the increasing number of connected “things” will present challenges such as security and privacy issues. Consortiums are being established to address these concerns and as the market matures, so shall the connected things.
For warehouses, the “smarter” they become, the more efficient they will be and thus allow for not only quicker delivery times to the end user but also will provide data that when analyzed will aid in improvements within the supply chain, company goals and objectives, new product development, and customer service.
ABOUT THE AUTHOR – Cathy Morrow Roberson
With over 16 years of ecommerce, logistics, and technology experience, Cathy Morrow Roberson is the owner of Logistics Trends & Insights (Logistics TI), a research and consulting firm focusing on the changing logistics landscape. In addition, Cathy has published several articles in such periodicals as Air Cargo World, CIO Review, and Pharmaceutical Manufacturing & Packing Sourcer.