18 Jun Internet of Things (IoT) and ERP Integrations: Influence on Supply Chain Management
The futuristic ideas portrayed in film of smart cities, artificial intelligence in the offices and smart robots managing many processes is already our reality. One of the most promising and revolutionary areas in IT is the concept of the Internet of Things (IoT).
This technology enables simple objects, known for people in everyday life, to obtain intelligence, communicate with each other, transfer and process information inside the network of objects and access data collected by other objects. IoT helps objects from the real world interact with virtual worlds, creating complex solutions for different spheres of life. From supply chain management and logistics, eCommerce and retail, to production and manufacturing, creating smart environments, smart production, smart supplies, and many more.
International trade and global supply chain management have become very complex. At any moment in time, there are approximately 6 million containers on ships being transported between major world ports. And according to statistics, more than 1,000 containers are lost during transportation. With such losses, the visibility of the transportation process and fast handling of any connection to its issues become vital for companies.
But how should we monitor this transportation of goods if there are so many suppliers all over the world? This is where ERP helps by serving to consolidate different sources of data and fast, real time processing, constant monitoring and dashboards with KPIs.
Challenges of Global Supply Chain Management
- Challenging global logistics
In the past production and manufacturing was more “regional” which meant that production of some goods was possible without involving third parties from all over the world.
Nowadays in order to manufacture product many other supporting companies worldwide are involved. So supply chain management should be as automated as possible with all processing as transparent as possible.
- Maintaining quality in customer services
Achieving high quality in customer services is all about delivering the right product at the right time, without delays, misunderstandings and other undesirable outcomes.
A very important issue is ‘transparency of transaction’ within the whole supply chain and regular client communication.
- Reduction of risk
Reduction of risk connected to global trade transactions is vital too. Challenges connected to interference with products after they leave the seller’s premises is one of the top priorities for the supply chain management.
Pirate attacks, storms in the sea which cause sinking of cargo containers ships, poor maintenance and collisions between vessels are just minor examples of all possible things which happen to goods during delivery.
- Keeping the quality of delivered goods high
Situations, when products are damaged or spoiled during transportation, are not rare, especially while transporting fragile or temperature sensitive goods, like wine, pharmaceuticals, medical devices, etc.
Destroyed grains during transportation from one continent to another is not a rare situation either. Poor storage conditions in containers, minor changes in temperature or moisture levels and the characteristics of product change during a check on the buyer’s side.
Internet of Things, ERP and Supply Chain Management
With the use of IoT in supply chain management collection and processing of data about how products are transported, if the storage conditions are good enough for the specific product when products will arrive from one place to another, became much easier:
- GPS trackers built into IoT devices can be attached to containers, boxes or products itself, transferring information to ERP systems where products are at the specific moment or gathering status reports after they reach specific places.
- Possibility to track the speed of movement enables faster and more efficient processing of goods which are arriving, helps companies to predict arrival time and plan the process more efficiently. Collection of data about the speed of movement allows ERP systems to analyse if the current remainings of goods are enough for the smoothness sales process as well as to alert responsible people in the case, remainings are not enough.
- Smart devices can measure the humidity levels, temperature, moisture, destruction of packaging and other storage conditions and alert product owners in case some pre-setup limits are reached. This helps to prevent spoiling of certain products and improve the quality of delivered goods.
- Smart tracking of routes and places where products got stuck in the whole supply chain can help to handle unwanted situations, before they even occurred, by changing destinations or taking alternative routes. ERP system collects the data from the smart devices and alerts if something goes wrong.
- Tagging of goods with smart devices while they are stored in the warehouse can help with easier and faster processing of orders, ensures precise warehouse location identification.
- Smart devices can help to reduce fraudulent behavior in international trade when several transportation companies or different means of transportation (trains, ships, trucks) are used in the transportation from one place to another. This helps to assure buyer and seller that products are exactly at the place where sellers claim they are as well as they are not substituted with other products during transportation. Smart sensors can send a report in real time and ERP system will alert that a problem occurred – products containers or boxes were opened or changed the route.
- Detection of destroyed products can be set up in two different stages – before the damage occurs and after it. Smart devices can track certain conditions and inform the ERP system that there is a danger of destruction, or it already occurred.
Open and mutually beneficial relationships between business partners are only possible if all parties of the supply chain have full access to the real-time accurate product data in the process of its delivery from one place to another. Integration of Internet of Things and ERP systems can help companies bring supply chain management processes to a totally different level, enhanced, transparent, easily monitored. Companies using such integration will outstrip the competition and deliver far better results to their clients.