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Internet of Things solutions in supply chain
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Monday, 09 March, 2015, 08 : 00 AM [IST]
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Ryan Goh
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fiogf49gjkf0d India is the second-largest producer of fruits and vegetables, second-highest producer of milk, fifth- largest producer of eggs and sixth in fish in the world.
But, unfortunately, it has an erratic produce-supply chain that leads to a lot of wastage. In India, fresh produce worth Rs 133 billion is wasted each year due to inadequate cold storage facilities and refrigerated distribution.
The major obstacles faced by Indian food supply chain include perishable nature of food items, shorter shelf life, food safety, and regulatory requirements, which require strict monitoring of FEFO (first expired, first out) so that products reaching the consumers are fit for consumption.
Enterprises dealing in fresh fruit and vegetable supply chain have to deal with particular aspects, like sustainability, global sourcing, quality preservation and the optimisation of efficiency in their logistic strategies.
For the suppliers of fruits and vegetables, the most significant challenge is the increasing consumer demand. Thus, there has been an increased need for IoT (Internet of Things) solutions like Radio Frequency Identification (RFID) that can provide interesting prospects for the management of information flow within the supply chain and security in the fresh fruit and vegetable sector. The collection and provision of information can have a positive impact on the strategies and result in an efficient process of enterprises.
In a food supply chain from harvest to market, many obstacles besiege the company to achieve profit and sale. And if an enterprise is forced to recall batches of its products, or a restaurant serves food that makes its patrons ill, the resulting consequences are plenty.
Product recalls can be a long drawn-out and costly affair, particularly when a company does not have full visibility over its products. For a global distributor, for example, it can take up to several months to trace the contaminated batch back to its particular supply source and then recall all the potentially affected batches from the same supplier.
In some cases, like salmonella or E.coli contamination, delays in product recalls pose a serious health hazard by placing the well-being of consumers at risk. This further leads to a damaged reputation for the affected enterprises and may subject them to disciplinary action from the relevant local authorities in a country. But, if enterprises mass recall all of their products, they incur a significantly high operational cost as a result.
Exploring real-time asset tracking
To avoid being caught in such a situation, enterprises today recognise the need for full, real-time visibility of their products as they move through the supply chain, from procurement to purchase. One of the best ways to address the need for visibility in the supply chain is through the implementation of IoT technologies like RFID tagging, which offer a bevy of benefits including asset tracking capabilities, protection against losses and theft, improved maintenance operations, and streamlined efficiency through better asset availability and utilisation. In a Forrester survey, firms in India show a particularly high rate of adoption, with more than 88 per cent expected to have implemented IoT solutions with another expected to deploy within a year. The respondents in India indicated some of the key benefits of IoT solutions including improved customer experience identified, followed by improved delivery process, improved safety, improved forecast accuracy and improved regulatory compliance.
With IoT solutions, businesses can gain visibility into their operational events involving their assets, people, and transactions. Once they can see the events happening in their value chain – in real- time – they can act upon them. For example, if a delivery truck driver carrying perishable food learns in real-time that the truck’s refrigeration fails, the distributor can reroute the truck, alert affected stores and reschedule deliveries. Despite the equipment failure, the delivery company satisfies its grocery customers and the grocery stores assure no spoiled food hits their shelves. This improves food safety and traceability, issues vital to the food industry.
Gaining visibility across the supply chain
In the food industry, some of the main benefits of IoT solutions include:
1) Asset Tracking
With asset tracking capabilities, not only will suppliers know where their products are in real- time, they will also be able to know what condition their products are in. It will enable enterprises to move their products, particularly the perishable types, through the supply chain quickly and efficiently, allowing them to reach supermarkets in time. Moreover, RFID tagging can ensure accurate record keeping of assets and eliminate the hidden cost associated with searching for lost or misplaced products.
2) Targeted Product Recall
As I mentioned above, when an enterprise does not have clear visibility over which batches of their products are contaminated, they will be forced to recall their entire line, resulting in high operational cost and loss of revenue. With RFID tracking, companies can easily narrow down the affected batches, trace their sources, and do a lean, targeted product recall, resulting in minimum disruption, revenue loss, and cost.
3) Increased Productivity
RFID tagging ensures employees do not have to spend unnecessary time and effort in manually storing and retrieving records and data repeatedly. With a one-time manual input, information related to a specific RFID tagged product can be computerised and easily available on request. This enables employees to focus more on tasks that generate value for their enterprises.
Real-time visibility in the supply chain remains imperative for companies wanting to prevent disruption to their business processes. While it might not always be feasible to avoid contamination leading to a product recall, IoT solutions allow enterprises to take the necessary proactive steps to minimise the impact of contaminations. As a result, vendors offering innovative and reliable IoT solutions, such as RFID tagging and real-time location solutions are increasingly in demand as businesses start realising the benefits of having visibility over their supply chains and assets. For example, in the aforementioned survey, 8 in 10 IT decision-makers from the manufacturing sector in Asia identify device manufacturers as their partners to help them realise the benefits of implementing IoT solutions.
Study findings
The Forrester study also reveals that 67% of the retail industry has already implemented or are in the process of implementing IoT solution for their business. Another 12% is expected to implement IoT solution within 12 months and a very minuscule 7% said that they will implement IoT solution within 5 years’ time. The retail industry ranked Inventory level tracking as the most important element of IoT solutions, followed by Theft or damage of goods, Supply chain visibility and Security or surveillance.
But, it is also important to remember that like with any technology, enterprises should not adopt a one-tag-fits-all approach to tagging their products. They must assess their needs and goals and understand how IoT solutions can help to improve their business before considering implementation. However, IoT solutions have reached a point in time where businesses can no longer ignore their importance in delivering business value.
(The author is vice-president, sales, APAC, Zebra Technologies)
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