Comment: Why IoT is not the key to unlock supply chain value

Global supply chain disruption costs the average business £145m a year – despite the deployment of more than 10 billion Internet of Things (IoT) devices worldwide and a whole host of supply chain IT systems.

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The problem is not a lack of data, which is why IoT is not the answer. It's the fact that a supply chain has numerous stakeholders operating in different jurisdictions, across multiple enterprise platforms and often in several languages. Creating effective connections between them is the real challenge, says Toby Mills, CEO of Entopy.

A new generation of technology is now making it possible to harness data across the supply chain for true cross-stakeholder visibility to unlock valuable benefits.

Research suggests that businesses with optimal supply chains can halve their inventory holdings, reduce their supply chain costs by 15 per cent and triple the speed of their cash-to-cash cycle.

But the increasing complexity of supply chains is making optimisation more challenging than ever, while the cost of inefficiencies is growing. Managing inventory errors, for example, tracking down missing paperwork, paying incorrect or fraudulent invoices and compensating for delivery delays costs, on average, £100 per purchase order.

End-to-end visibility is crucial to improve supply chain performance – and IoT technologies have long been tipped as a solution. But the biggest hurdle is that each stakeholder is a separate entity operating independently. It is comparatively simple to digitise a factory – with everything under one roof and controlled by one organisation. But an entire global supply chain is a very different matter.

Mobile devices are often seen as a potential solution when fixed infrastructure is too expensive and impractical outside each stakeholder's internal network. But they are also expensive, as well as costly to maintain. So, although they could offer truly remote monitoring, they would have to be retrieved after use – which significantly limits their operational use in a complex supply chain involving multiple different organisations.

That's why the latest 'data mesh' technology is starting to make inroads and unlocking value from even the most challenging supply chains through the use of intelligent data orchestration.

Data mesh is based on distributed architecture for analytical data management. It enables end users to easily access and query data where it lives – without first transporting it to a data lake or data warehouse. Data ownership is distributed to domain-specific teams that manage, own and serve the data as a product.

The aim of data mesh is to eliminate the challenges of data availability and accessibility at scale. It allows business users and data scientists to access, analyse and use business insights from virtually any data source, in any location, without intervention from expert data teams. Data becomes accessible, available, discoverable, secure and interoperable.

Intelligent data orchestration is then the secret of success for the supply chain. Just like in a traditional orchestra, a 'conductor' takes centre stage and synchronises all the various data inputs, applying analytics to enable end-to-end visibility and automation as goods move between stakeholders.

Each separate system communicates directly and only to the 'conductor' platform – removing the need for numerous discrete connections and maintaining data integrity. The platform can handle inputs from multiple sources and is scalable, secure and robust.

Within the platform, digital twins are created using all the different data inputs. Data from GPS trackers in delivery vehicles, for example, is used to generate real-world co-ordinates for the virtual environment. These can be combined with inventory data so that both the warehouse manager and the customer know exactly where every box is at any time.

Key events can be communicated directly to all stakeholder systems or just to key stakeholders. When goods move from a supplier to a customer via a third-party logistics company, for example, all stakeholders have full visibility as the goods move from warehouse to consolidation hub and then to the customer. Any bottlenecks in the system suddenly become clear, enabling issues to be resolved fast.

Using geofences and GPS on the delivery vehicle, the platform can automatically update all the relevant stakeholder systems when the goods arrive. They will also be notified if, for example, pallets are consolidated along the way. And all communication is owned by the stakeholders involved, allowing branding and customisation – and avoiding the situation where businesses let couriers handle delivery communications with their customers.

With supply chains increasing in complexity and under more strain in the post-pandemic world than ever before, intelligent data orchestration is offering a new route to unlock supply chain value and deliver competitive advantage.

Toby Mills, CEO of Entopy