How IoT improves supply chain sustainability

Schneider Electric

Friday, 29 October, 2021


How IoT improves supply chain sustainability

It comes as no surprise that the world has been pushing for more energy-efficient options in all facets of life. From transportation, retail and agriculture to consumer goods and services, the threat of climate change and rising energy costs have forced organisations to double-down on their efforts to cut greenhouse gas emissions.

Although these pushes for supply chain sustainability are sometimes framed as a way to appease the general public, the truth is that implementing and improving sustainability initiatives benefits an organisation’s bottom line, both in the short-run and the long-run.

It has also never been easier for a supply chain to implement sustainable plant engineering practices. With recent advances in IoT technology and enhanced connectivity being embraced across industries, supply chains can use their existing IoT sensors and network capabilities to push their sustainability efforts, all while seeing increased ROIs through continuous improvements. This is sustainability that goes beyond just having notable corporate social responsibility.

Here are some of the benefits that IoT technology brings to a supply chain’s sustainability:

Increased fuel and energy efficiency for logistics operations

It costs money to move goods and supplies around. The average 18-wheeler truck costs over $1400 (US$1000) to fill up on diesel fuel. Planes can often reach the $14,000 (US$10,000) per fight. When vehicles are out on the road, businesses need to know where they are at all times, and how they can make transit routes as efficient as possible.

With the right IoT technology in place, trucks can be rerouted for new deliveries while still on the road, deliveries can be optimised so that vehicles use less fuel and real-time analytics can allow a company to estimate fuel costs well in advance and make changes as they see fit.

These gains go beyond truck fleets and cargo planes. With inventory management software and integrated IoT sensors, forklifts can also be used more efficiently in a warehouse or freight yard, with operators being able to locate pallets and shipments with real-time tracking. This reduces the amount of time spent driving around just looking for the right materials to move. On average, forklift operators have been able to move up to 30% more freight within a regular work shift hour, all while saving on fuel costs.

The less time vehicles are out on the road per shipment, the more money an organisation is saving. With a connected fleet of cargo vehicles, supply chains can reduce their carbon footprint while increasing their profit margins through energy savings.

Increased efficiency in manufacturing operations

Downtime is a productivity killer for a supply chain. No matter if it’s malfunctioning factory equipment, a delayed cargo shipment, a miscalculation in inventory or a supplier mix-up, downtime grinds production to a halt and employees are left to wait on standby.

By harnessing IoT technology, these downtimes can be predicted within a supply chain before they affect operations, and resources can be diverted to address the problem quickly and efficiently. AI can predict that a conveyor belt will require maintenance in the near future, and the repairs can be scheduled during off-hours. Employee shifts can be scheduled accordingly while workers and supplies are diverted to another factory so that the supply chain continues to operate smoothly.

Predicting these types of supply chain disruptions allows businesses to better allocate resources that prevent increased costs and wasted resources.

Better inventory forecasting, less waste

Storing merchandise is a cost that many companies have grown to accept. That doesn’t mean they don’t stand to gain from being more sustainable in their warehousing practices. From e-commerce merchandise to dangerous goods to materials that require refrigerated storage, merchandise that sits around a warehouse is money being spent.

This is where IoT can help a supply chain using digitisation. Supplies spending an abnormally long time in a warehouse is usually because of one of two factors:

  1. Miscalculations in required inventory that result in excess product that outweighs demand.
  2. Poor logistics tracking that leads to merchandise being misplaced or lost within the inventory system.

These can both be addressed using IoT technology and PIM software. With a connected network, a supply chain can track a shipment along every step of its journey and automate alerts for warehouse inventories. With an integrated PIM system in place that can categorise different types of shipments, an employee will be able to find what they’re looking for within any warehouse, have it shipped to their location and alert other departments about that specific shipment being reserved.

IoT technology also allows global supply chains to take advantage of inventory forecasting software, which can reduce overproduction of goods. Using predictive analytics, an IoT network can track how many units have been sold at specific locations and adjust inventory based on the volume being sold. Over time, AI can even predict when outside factors such as seasonality and purchasing cycles will affect sales and adjust inventory volumes automatically, reducing waste and energy costs that arise from transporting merchandise and manufacturing operations.

A connected IoT network can also better predict and calculate the required inventory needed for a specific part of a supply chain and adjust production to meet demand levels. This reduces warehousing costs and wasted raw materials in a cohesive manner.

Reduced food waste and spoiled goods

Food manufacturing has a unique supply chain. On top of the usual challenges that are par for the course in a supply chain operation, food manufacturers have the added challenge of working against the clock in trying to get goods from the plant to grocery retailers as quickly as possible before they perish.

Food spoilage is a major issue. On average, 1.3 billion tonnes, or 1/3, of all food products are wasted each year. In a world where consumers are demanding fresher nutrients and pushing back against the use of untested preservatives, there is a lot of work to be done to reduce the level of waste.

Using IoT sensors on shipping containers and trucks, an agricultural supply chain can keep track of which deliveries must be delivered first and by which date. A refrigerated container can automatically detect when temperatures are too high and alert personnel immediately. Inventory forecasting allows grocers and distribution centres to accurately estimate how much inventory a grocery store can feasibly handle at a given moment and what their regular sales capacities are.

Even food safety measures can be improved with IoT technology. On average, there are hundreds of global outbreaks of Listeria every year, with food products being recalled rapidly. A major challenge within food supply chains has been pinpointing which exact products are infected and need to be recalled. To be safe, manufacturing dates are used to pinpoint which batches of food products might be infected and have them recalled.

With the advent of factory automation within food processing facilities, where every conceivable metric can be measured and tracked, a Listeria outbreak can be caught more quickly and with greater precision. Instead of scrapping an entire crop as a safety precaution, a contaminated batch of food products can be traced back to their origin point with greater precision. With more data at their fingertips, food plant managers and industrial engineers can reduce the amount of food product that needs to be destroyed when a recall is issued while still exceeding safety protocols.

With rises in production costs and increasing scrutiny from the public to achieve carbon emissions targets, business leaders are under more pressure than ever to improve global supply chain sustainability within their operations. With the help of IoT technology, efficiency and productivity can be achieved in synchronous fashion as businesses continue to push forward towards a greener future.

For more on IoT technology and how it helps the F&B and manufacturing industries improve sustainable supply chain management, visit https://www.se.com/au/food-and-beverage.

Image credit: ©stock.adobe.com/au/dusanpetkovic1

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