According to analyst firm Gartner Group, the number of connected devices will increase thirty-fold by 2020 to 29 million. Cisco estimates that the number will be even greater, predicting that there will be in excess of 50 billion devices by then. This is set to have a tremendous impact on productivity and the economy as a whole, providing a boost up to $6.2 trillion by 2025. General Electric alone have estimated that it will bring about a 1% improvement in productivity across its global manufacturing base, which translates to roughly $500 million in annual savings.
One area where its impact is expected to be most pronounced is in the supply chain, helping to transform processes and allow for more accurate and timely stock replenishment, better equipment monitoring, and helping to trace cargo more precisely.
For organizations to fully exploit the benefits of IoT in their supply chains, they need to prepare for implementation now. According to Mark Wilkinson, SAS regional VP for Northern Europe and Russia/CIS, ‘Just under half of UK businesses are not using any form of big data analytics, and those that are will sometimes be using it infrequently in just one or a few areas of the business. Less than one in three have adopted IoT.’ While IoT technologies are yet to fully mature, and new applications will emerge thick and fast for the next decade, early adopters stand a far greater chance of leveraging it for a competitive edge. Those who hold off, meanwhile, will likely flounder and lose out.
Companies should first pinpoint the opportunities that IoT can bring about. In terms of increasing supply chain visibility, it will provide a particular advantage, and companies need to prepare for the increased expectations from partners for real time information. They also need to have the technology in place that can deal with IoT and the data it will produce. The cloud offers a scalable environment which best suits the size of the datasets, while firms also need to find a tool that can integrate the IoT across multiple platforms and streamline data.
The tools need to be in place that can make use of the speed that IoT enables, so a shared platform where insights can be viewed by decision makers in real time is a good place to start. Things also need to change on an industry level before IoT can really be adopted. There are currently many systems and machines producing data, but a limited number that actually allow for the exchange and store information in the standardized way needed for adoption of IoT solutions at scale. Standards need to be in place for the format of data emanating from sensors. This will require a wholescale effort on behalf of industries to coalesce around data standards, such as MT Connect and OPC-UA. Without these, it will be impossible to automate basic supply chain decisions.
Another important consideration is cyber security. Everything that can be connected to the Internet can be hacked, and IoT devices are particularly vulnerable because the market is growing so rapidly, and the pressure for organizations to bring products out as quickly as possible often means sacrificing proper security practices. To minimize risks, organizations need to close backdoor access by understanding devices’ vulnerabilities and how they connect to other systems in ways that could leave those exposed.
IoT is still early in its lifecycle, but both the complexity that comes with implementation means that staying ahead of the game is the best way to reap the benefits.