AINews & Analysis

How IoT Is Disrupting The Logistics Sector


IoT (Internet of Things) is not just a buzzword in the field of technology today, it is already underway as we get to see its practical implementation in the corporate world.  IoT is a network of embedded electronic devices equipped with software that communicate with each other in real time via the internet. It consists of a connected ecosystem that transmits information about the physical environment beyond the limits of traditional devices like desktop, tablets and mobiles. IoT enabled devices allow for monitoring conditions during shipment – not just temperatures and humidity, but vibrations and shocks as well.

It is estimated that by 2020, 50 billion devices will be connected to the internet. A white paper published by DHL and Cisco indicate that IoT will deliver $1.9 trillion to the enhancement of SCM and logistics. In the GCC, the IoT solutions market will be worth $11 billion by the year 2025 and the impact on transportation and logistics is set to touch the mark of $18 billion as per a study conducted by AT Kearney.

“With the IoT, the supply chain will have unprecedented access to data valued by internal and external stakeholders. This presents an opportunity for supply chain groups to co-develop new information-based solutions for individual customers or markets.”- Gartner. IoT is said to be the cornerstone of the fourth industrial revolution which relies on seamless data flow and real time business analytics. The main drivers behind the growth of IoT are availability of cheap and reliable sensors, penetration of internet, massive increment in data storage and processing capabilities and emergence of AI. The future of IoT is predicted to lead to a 15% productivity increase in delivery and supply chain industry and many logistics experts are using these new resources to enhance systems and supply networks, reduce costs and look for opportunities to generate high revenues.

In the logistics sector, the IoT devices that will have maximum use are smart sensors, RFID (Radio Frequency Identification) chips and cloud based GPS-enabled trackers. The logistics sector can harness IoT to achieve real time ambient data collection, collaborative information sharing, enhanced capacity utilization and process automationas well as a higher overall efficiency

The logistics sector is on the cusp of a revolution as companies are gearing up to integrate IoT in their daily operations. IoT is supposed to be the main pillar of Logistics 4.0. There are multiple avenues which will undergo transformation with the adoption of IoT. Take for instance, traffic management and how IoT can reduce a lot of idle times. By the year 2025, the value of time lost due to traffic jams is projected to reach $11.8 billion. Effective route utilization and real-time inter-vehicle communication can cut down the cost by almost 50 percent.

Similarly, IoT causes reduction in fuel usage. Every year, traffic jams lead to costs of about $117 million due to fuel usage. IoT can reduce that to half. Also, route optimization and connected cars can reduce the number of accidents by as much as 6 percent.

Smart logistics or fleet management is another advantage of IoT in the logistics sector. In case of any business exception, real-time notification to the managers enable them to respond to the situation immediately thereby reducing downtimes. IoT would enhance fleet efficiency by eliminating the bottlenecks in the system. Also, with smart sensors embedded in the vehicles in critical places like damper system, it would be possible to autonomously monitor the health of the vehicles and usage of advanced analytics would empower logistics firms to undertake predictive maintenance. The sensors could also predict the ideal time for maintenance breaks.

The RFID chips embedded in freights could provide complete visibility especially during transit. Hand-held mobile devices and bar code scanners provide high accuracy during shipping and receiving of goods thereby giving the managers visibility of the consignment from start to end point and in-between. Finally, sensitive goods like food items and pharmaceuticals require temperature controlled environment during transit to avoid damage. Cloud based sensors can continuously monitor the ambient condition throughout the journey and transmit real-time data to the manager thereby providing effective asset management and monitoring capacity. This reduces the chances of damage of goods and ensure higher efficiency.

Given all that’s at stake, the value of a connected logistics platform is beyond question. The Internet of Things (IoT) to yield real-time automated, sense-and-respond feedback mechanisms.  On deep diving, one can find many more benefits that address currently existing challenges. Millions of logistics needs get created every day, and millions get addressed. Most of these logistics needs can be pre-empted through IoT applications across industries. The few that cannot be pre-empted can be better managed with predictable transit durations. While logistics has been the first few industries to adopt IoT, the applications are yet at a nascent stage from what they potentially could be.

(The author is  CTO & Co-founder of FarEye)

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