We are just about at the end of the year and readying ourselves to make predictions for the new decade, but before I start to do that, I thought we should look at what’s been happening in procurement, supply chain, and how the IoT (Internet of Things) is making an impact on business processes.
This past weekend was pretty remarkable for the retail industry. Black Friday sales topped a whopping, $7.4 billion. It’s not surprising almost $3 billion of those sales were conducted digitally using a computers, tablets, and smartphones.
So just how important is technology in this race to capture consumers and businesses? There is no question businesses alike are facing common hurdles as they integrate the IoT and AI (artificial intelligence) technologies into supply-chain operations.
To meet customer satisfaction that means the supply chain is proving to be an integral part of a company’s ability to meet customer demand and to develop customer loyalty. In fact, the idea is that one day, the supply chain will essentially think for itself.
Just a few years ago, worldwide IoT spending for the supply chain reached $800 billion, according to IDC. At the time, IDC pointed to the supply chain as the biggest use case and opportunity for the IoT.
Segments within the supply chain—like manufacturing operations, freight monitoring and logistics, and production asset management—can all benefit from the realtime visibility and increased access to data that the IoT offers.
Looking at just logistics, Research and Markets says the global IoT devices market in the logistics sector will continue to grow from $90 million dating back in 2015 to $2.4 billion by the year (2020). And the number of IoT connections within the logistics industry will increase from 15 million to 255.5 million by 2020, during the same period.
All of that said, there’s been significant IoT adoption in supply chain and logistics in the past few years, and the projections suggest the future is bright. Projections make a number of assumptions.
For instance, these research firms are assuming that certain hurdles currently holding sectors back in terms of IoT adoption will be overcome.
Maybe costs will drop, maybe new technologies will be invented, or maybe new entrants to the market make new use cases plausible and affordable. It’s a safe bet because this is almost always what happens. But, as an organization in the throes of IoT adoption, it’s not always easy to see the big picture. Hurdles may seem insurmountable.
Let’s look at some of those hurdles now:
- Integration with the IoT
- Meeting customer expectations
- Maintaining hardware and software to ensure security
- Connectivity issues
- Potential governmental regulation
Anyone that has been involved in an IoT integration knows that it’s not easy. It takes a lot of hard work, dedication, and patience. But in the end, the work is worth the effort. There will be missteps. IoT adoption is really about strategy, integration, and re-engineering.
Thus, it’s important to recognize implementing and adopting IoT technologies is not as simple as buying something off the shelf, plugging it in, and then simply reaping the benefits.
Most manufacturing procurement processes are only as good as the ability to optimize the integration of people, processes, and technologies. What’s more, the integration technology upgrade is going to be mostly superfluous if the companies involved aren’t willing to rethink how they’re going to re-engineer their entire system to best leverage the new technological capabilities.
Of course, don’t ignore the financial hurdles. Many companies also face budget constraints, and the cost of ensuring IT connectivity across all platforms and network entities can be a barrier for sure.
Another hurdle that should also be mentioned is that many companies face a strong resistance to change within their organization. This one can be sneaky, because often resistance to change is at the heart of a company’s reluctance to “go for it.”
Management may see the list of hurdles their team has compiled and determine the move forward plan as just too risky. Rather than addressing these hurdles one by one, some companies just don’t feel it’s worth the risk. Interestingly, when you dig deeper you discover the real issue is fear of change.
One trend we’re seeing in procurement and supply chain is the increased use of AI technologies to enable proactive decisionmaking. With new uses of relatively new technologies, we need to accept that only some of the hurdles are known at this point.
As we continue to leverage AI in supply-chain operations, there will be unknown challenges that crop up, and businesses will need to be prepared to meet these challenges head on.
With AI, it’s important to think about things like unintended consequences from an AI’s decisionmaking process. There are a lot of ethics and privacy questions raised by AI in almost all of its applications, and there is no doubt these will create implementation challenges too.
Therefore, when considering the hurdles to implementing technology in any business and it feels overwhelming, perhaps the best defense is the best offense. Simply ask the question: Is resistance to change at the heart of my team’s reluctance? Are these real hurdles or just fears?
When weighing hurdles and figuring out how to can overcome them, don’t forget to look very closely at security and privacy. These two points sometimes are assumed as very much in the picture, but are often not examined as deeply, as necessary.
If implementing AI, consider what potential unintended consequences may arise from these AI algorithms, and don’t shy away from ethical discussions. All too often, it’s the most uncomfortable discussions that bear the most fruit.