The Internet of Things Will Affect the Supply Chain and Much More

Stephen DeAngelis

July 15, 2015

“The world is on the threshold of a new era of innovation and change with the rise of the Industrial Internet,” writes General Electric’s Peter C. Evans, Director of Global Strategy and Analytics, and Marco Annunziata, Chief Economist and Executive Director of Global Market Insight. “It is taking place through the convergence of the global industrial system with the power of advanced computing, analytics, low-cost sensing and new levels of connectivity permitted by the Internet.”[1] Most people are more familiar with another name for the Industrial Internet — the Internet of Things (IoT). Regardless of what you call it, the IoT is primarily a network that connects machines rather than people. It fosters machine-to-machine (M2M) communication to improve everything from routine maintenance to safer driving. Cisco believes that distinctions between today’s Internet (i.e., the World Wide Web which is primarily a people-to-people network) and the IoT will blur so completely that they will merge into an Internet of Everything (see my article entitled “The Internet of Everything and Global Transformation“).

Maxwell Wessel (@maxwellelliot), Vice President of Innovation at SAP, James Allworth (@jamesallworth), Director of Strategy for Medallia, Inc., and Aaron Levie (@levie), co-founder and CEO of Box, agree that all of our lives are going to be touched by the world of connected things. “Ask anyone in technology,” they write. “Sometime soon, the world around us will be smart. Everything from mugs to mailboxes will be context-aware.”[2] Kevin Kelly (@kevin2kelly), founding Executive Editor of Wired magazine, described this same future when he tweeted, “In the very near future you will cognify everything in your life that is already electrified.” You might think that we are well into the journey towards the Internet of Everything, but according to Wessel, Allworth, and Levie, “Despite the inevitability of this ‘smart’ future, today only a small portion of businesses regularly merge data and physical products.”

Of course connecting products to the Internet and gathering data from them is not what makes the future smart. What makes the future smart is the ability to analyze all of that data and mine it for actionable insights. Peter Sondergaard (@PeterSonderg), a senior vice president at Gartner, writes, “Data alone is not going to be the catalyst for the next wave of IT-driven innovation. The next digital gold rush will be focused on how you do something with data, not just what you do with it. This is the promise of the algorithm economy.”[3] New York Times’ reporter Quentin Hardy (@qhardy), wonders whether all of this technology is going to be good for everyone. “The technology world is looking at ways to make everything more efficient,” he writes. “The question is, will this be good for the many, or the mighty few?”[4] The answer to that question is not as ambiguous as Hardy might think. Certainly large vendors that support the IoT are going to make a lot of money in the decades ahead; but, the efficiencies and benefits generated by big data analytics are going to have a positive effect on all of our lives. Everything from smart urban systems to better health monitoring are going to touch our lives.

The magic behind the curtain of the IoT is going to be artificial intelligence systems that carry out the algorithms discussed by Sondergaard. More specifically, cognitive computing systems are going to provide the context discussed by Wessel, Allworth, and Levie. Perhaps the most profound result of the rise of the IoT is that it will usher in a new industrial revolution. Burke Maxwell, product marketing manager at Covisint, writes, “Some say that the digital revolution marked the end of the machine age. But the reality is that the Internet and digital communications are taking machines to entirely new levels of interaction, productivity and usefulness.”[5] Maxwell believes that some of the most significant IoT impacts will be felt in the supply chain. He explains:

“Here’s how to use this dynamic to transform your supply chain and your enterprise. Instead of asking, ‘Will it be worth the effort?’ you should ask, ‘How can we afford not to engage in the endeavor?’ You can paint some very compelling pictures of the connected supply chain. Here is one from a macro perspective:

  • Intelligent loading bays track trucks in transit; automatically calculate time of arrival, unload time and required warehouse space; and alert appropriate receiving and warehouse personnel.
  • Material pickers and staging machines are automatically scheduled to get the raw materials from the warehouse to the manufacturing line at the right time.
  • Complex production schedules get laid out automatically — from sub-component builds to final assemblies, quality checking, packaging and outbound warehousing — with all required personnel aligned to the schedule.
  • Outbound carriers are automatically alerted to when to schedule pickup, while the distribution center is alerted to the arrival time and quantity of goods.
  • Retail stores are updated on inventory availability and, when in-store inventory levels fall below set thresholds, replacement orders are automatically placed and the cycle starts anew.

In this sequence of scenarios, human effort and precious time are squeezed out of supply chain processes at a time when both are at a premium. Costs are reduced while productivity and competitiveness are increased along the line.”

One thread that weaves its way through each of these scenarios is automated decision making for routine decisions. Automated decisions are best made by cognitive computing systems, like the Enterra® Enterprise Cognitive System™, that can apply both mathematics and semantic reasoning (to provide context) to the decision-making process. Predictions about an “always connected” world are not pie-in-sky musings of futurists. Even though the journey has just begun, all of the necessary pieces to make it a reality already exist. Wessel, Allworth, and Levie, however, remind business executives that the predicted future won’t emerge by itself. The desired positive outcomes will only emerge if decision makers proactively engage to make it happen. They explain:

“Every day, people are finding ways to use information to improve our lives, let our machines know us as we approach them, automate basic decisions in our organizations, and improve our relationships with our customers and employees. But while data offers endless possibilities, it also offers real management challenges. To take advantage of data’s opportunities, managers must get out in front of these problems.”

Evans and Annunziata conclude, “The scope for transformation is tremendous. The potential impact of Industrial Internet technologies spans almost half of the global economy and more than half of the world’s energy flows. In a host of industries, linking intelligent devices, facilities, fleets and networks with people at work and on the move will offer new possibilities in process optimization, increased productivity, and efficiency.” The fact of the matter is, they may actually understate the future. I tend to agree with the pundits at Cisco who predict the rise of the Internet of Everything. The blurring of the lines between the World Wide Web and the IoT will be so extensive that most of us won’t be able to tell the difference. We’ll just know that our wearable devices and smartphones help achieve many of our desired goals.

Footnotes

[1] Peter C. Evans and Marco Annunziata, “Industrial Internet: Pushing the Boundaries of Minds and Machines,” General Electric, 26 November 2012.
[2] Maxwell Wessel, James Allworth, and Aaron Levie,”Old Management Systems Stifle New Business Models,” Harvard Business Review, April 2015.
[3] Peter Sondergaard, “The Internet of Things Will Give Rise To The Algorithm Economy,” Gartner Blog Network, 1 June 2015.
[4] Quentin Hardy, “The Sensor-Rich, Data-Scooping Future,” The New York Times, 26 April 2015.
[5] Burke Maxwell, “Machines Are Finally Earning their Way in the Connected Supply Chain,” Supply & Demand Chain Executive, 21 April 2015.