In 1764 James Hargreaves invented the Spinning Jenny, a machine that cut the time to spin yarn by 80%. Not only was it a considerable feat of engineering, but it represented the novel idea that true manufacturing efficiency was not achievable with elbow grease alone. Thus, the first industrial revolution was born [1].

The notion that humans could work in tandem with machines was further developed by Henry Ford through his innovative solution for mass production, the assembly line. This manufacturing renaissance was known as the second industrial revolution and laid the foundations for the society we live in today [2].

We have come a long way since the era of coal and steam. The development of computing and its continually improving processing power has led to an epoch of advancing automation and data analysis [3]. Often referred to as Industry 3.0, it further distances humans from the manual activities that were so prevalent during preindustrial times.

The fourth iteration of the anthropological revolutions, Industry 4.0, comes as a result of the complete digitisation of processes that can lead to the redundancy of humans altogether.

The Internet of Things (IOT) forms the backbone of Industry 4.0 through ubiquitous connectivity of digital and mechanical systems. But what is it and, more specifically, what does it mean for our supply chains?

The Internet of Things

Coined by entrepreneur Kevin Ashton, the IOT refers to the communication of physical objects, machines or sensors through a cloud-based network that enables process automation and targeted collection of data [4]. In simple terms, this means getting physical things to communicate with each other over the internet. It is important to distinguish between Artificial Intelligence (AI) and the IOT. AI is the processing of data to support and mimic human decision-making, whereas the IOT involves the communication of devices that omits the need for human intervention altogether.

It is predicted that the number of connected devices within the IOT will reach 1 trillion by 2025. However, many of us are oblivious to the sheer scale of this network’s involvement in our everyday lives [5]. Examples of connected devices include thermostats, watches, healthcare devices, cars, mobiles and bins. Yes, you read that correctly – bins. In a recent spell of IOT innovation, companies such as Bin-e have created bins that communicate their capacity with each other to determine the optimal route for the collection lorries to take, all without human intervention [6].

What are the Risks?

While the IOT facilitates many processes we take for granted, it does come with some risks. In recent years a lack of silicon, coupled with increased demand for its use, has manifested into a global chip shortage with leading manufacturers such as PlayStation and Volvo having to slow or completely halt their production. [7] This has also proved problematic for the IOT as servers that host cloud networks require these components [8].

Secondly, the inherent lack of human intervention in the IOT means it can be difficult to identify faulty sensors or incorrect data, especially when the device or sensor is in an area with limited access to the internet [9].

Finally, the aforementioned servers require vast amounts of energy and potentially pose a serious negative impact to global warming. To mitigate this issue, the adoption of renewable energy sources for servers is crucial [10].

While there are plenty of hurdles to overcome as we work with these technologies, building a smart, IoT-enabled network can open-up possibilities to automation and collaboration that cannot simply be ignored by any organisation seeking greater efficiency.

How are Supply Chains Benefiting from the Internet of Things?

Since before the dawn of Industry 4.0, data has played a crucial role in supply chains. Now, fuelled by IOT innovation and growth, the Supply Chain 4.0 maximises data collection to automate operations and derive optimal productivity [11]. Below are four ways in which the IOT brings great benefit to our supply chains.

Real-time Analytics and Governance

Companies such as Amazon Web Service (AWS) utilise the IOT to pool data from interconnected devices over time to understand how they are being used and their current maintenance requirements. Some devices, through sensors, can even measure the change in their external environment. When collected appropriately, this allows companies to gain a better understanding of the heartbeat of their operations and automate decision-making to increase productivity [12].

Forecasting

The Supply Chain 4.0 model seldom settles for real-time analysis alone: it also utilises the data from its physical infrastructure to inform future decision-making. This includes, but is not limited to, human resource planning, demand forecasting and predicting maintenance requirements and costs. For example, in the telecommunications sector, innovative network builders are monitoring their infrastructure closely with the use of cable sensors to measure network degradation [13].

Robotics

Robotics advancements have not only expedited the manufacturing of goods but are now enabling digitised supply chains to cut cost structures and increase the efficiency of the movement of goods. Communication between robots is no longer constrained by geographical proximity, but exists across a data flow that pierces all levels of a supply chain. For example, robots that manufacture goods are now able to actively communicate with warehouse robots to inform demand and stock levels [14].

Shipping

If you have recently placed an order online for a home delivery, you may be familiar with the “Your order is currently 4 stops away” message. Although this message may be signed off with a human name, in most cases this is the final output of a long line of communicating devices which has seen minimal human intervention. Similarly to the automated bins, ships, freights, and vehicle couriers, delivery companies are harnessing the IOT to automate route planning and mitigate the risk of human error [15].

Deecon: A Driving Force for Industry 4.0

Deecon understands the logistics and cost pressures that organisational leaders are facing as supply side constraints continue to contribute to inflation and create unique challenges in delivering infrastructure projects. Building a smart, connected, IOT-enabled network will involve significant expenditure and take time to fully optimise. However, those companies that invest in efficiency early through IT systems can beat competition to achieve scale in their digital network with more volume to lower unit cost.

Deecon has acted as a driving force in digitising businesses for our clients, identifying and implementing workflow systems that provide a digital core for operations within the telco, energy and construction sectors. Once a data standardisation and coordination platform is in place, it is time to consider ecosystems and connectedness as market leaders will need a digital network that allows them to continually increase automation and drive operational efficiency.

For more information about how Deecon can support your transformation projects, click here: https://www.deeconconsulting.com/services/transformation

Words by Jonathan Brownfield

References

1. https://www.britannica.com/summary/Industrial-Revolution-Causes-and-Effects

2. https://www.history.com/topics/inventions/henry-ford#:~:text=In%20order%20to%20meet%20overwhelming,moving%20assembly%20line%20for%20cars.

3. https://www.upkeep.com/learning/industry-3-0-vs-industry-4-0

4. https://www.smithsonianmag.com/innovation/kevin-ashton-describes-the-internet-of-things-180953749/

5. https://www.analyticsvidhya.com/blog/2016/08/10-youtube-videos-explaining-the-real-world-applications-of-internet-of-things-IOT/

6. https://bine.world/#how-it-works

7. https://www.bloomberg.com/news/articles/2022-03-22/volvo-cars-cuts-2022-production-goal-on-chip-constraints#:~:text=Volvo%20Car%20AB%20warned%20it,Swedish%2DChinese%20carmaker%20said%20Tuesday.

8. https://www.nabto.com/worldwide-chip-shortage-how-affect-IOT/

9. https://www.teracode.com/blog/why-data-quality-matters-more-than-data-quantity