In Times of Crisis IoT Strengthens Supply Chains

How can companies in different industries make use of the Internet of Things to optimize their supply chains? A look at the practice shows how.

Sometimes a single container ship is all that is required to test the (business) world’s patience. When the ‘Ever Given’ ran aground in spring 2021, blocking the Suez Canal in Egypt for an entire week, the repercussions were devastating. Several hundred ships were held up, unable to deliver their cargoes to their destinations. And when the supply chain is interrupted and commodities or intermediates fail to find their way to the production line, manufacturing, further processing and other processes can come to a standstill and costs soar. The Suez Canal blockage is estimated to have cost around EUR 400 million per hour.

Figures from a study by the Hans Böckler Foundation’s Institute of Macroeconomics and Economic Research (IMK) also show how costly disrupted supply chains can be. Between the beginning of 2021 and mid-2022 German industrial enterprises were unable to manufacture goods worth around EUR 64 billion because their suppliers had production problems, transportation did not function smoothly or the German firms had miscalculated procurement costs.

These are just examples of the supply chain challenges that companies face today. Enterprises in quest of long-term success can no longer succeed without transparency, efficiency, resilience and sustainability. The Internet of Things (IoT) provides them with valuable tools for use across a wide range of industries and use cases.

Logistics is the key supply chain sector and in Germany’s case road freight is clearly the transport mode of choice. According to a study published by the Federal Office for Freight Transport (BAG) road freight accounted for nearly three quarters of goods shipped in 2021 and forecasts do not anticipate significant changes in the near future. The difficulties that transportation companies face on a daily basis include the need to state an ETA (Estimated Time of Arrival) that is as precise as possible. It is not always clear where goods or vehicles are or whether traffic congestion or a breakdown will cause delays. The result is that processes at the receiving location may be delayed and additional costs are incurred.

Both the logistics sertvice provider Dachser and the general cargo cooperation IDS Logistik now rely on the Internet of Things to ensure the desired transparency. Both have digitally connected their swap bodies – special containers for flexible transportation of goods by truck – and can now track them reliably everywhere. Not just in Germany but, if required, throughout Europe. They use tracking modules or GPS trackers that either report their position regularly via the cellular network, relaying data to the Cloud by LTE-M, for example, or facilitate direct real-time tracking. Times of arrival can be predicted reliably, enabling processes to be optimized at their own logistics centers and those of their customers. IoT technology benefits sustainability too. The information gained enables companies to prevent unnecessary empty runs and improve their fleet management. CO2 emissions are reduced and efficiency is increased.

Once the goods have arrived as expected the Internet of Things helps to optimize the intralogistics. Companies can, for example, digitize their incoming goods inspection, using electronic delivery notes and scanners. Errors due to illegible writing on paper notes or to lost delivery documents are a thing of the past. In a next step autonomous logistics robots can transport the goods to where they are needed on the premises by means of solutions such as Precise Positioning that navigate the robots precisely around the site. These mechanical aides improve efficiency and the paperwork that is no longer needed benefits the environment.

Establishing sustainability along the supply chain is just as important on ecological grounds as it is for economic and regulatory reasons. For one, more and more business partners, investors and customers expect an effective sustainability strategy. So much so that many people in Germany would avoid or boycott companies or brands that show too little commitment in this respect, according to a 2021 Statista opinion poll. For another, legislation such as the Corporate Due Diligence Obligations in Supply Chains Act (LkSG) increasingly requires companies to improve and document their  commitment to more sustainability.

If logistics companies manage their vehicle fleets ideally, avoiding unnecessary runs, that is already a sustainably effective measure. Another is to opt for e-mobility. The Berlin startup citkar, for example, manufactures e-cargobikes that transportation and delivery companies can use to make the last mile eco-friendly. And an IoT solution with GPS trackers and a Cloud platform makes using the vehicles even more efficient. It records mileages and speeds, enabling citkar to determine by means of predictive maintenance when the next service is due. The solution includes a digital vehicle file or digital checkbook with details of previous maintenance work. That improves the e-cargobike’s reliability and suitability for daily use and makes Green Logistics based on e-mobility more attractive for companies.

The last mile is no stranger for the food delivery service flaschenpost, which is also well acquainted with the challenges of a supply chain. Until recently, however, the company’s processes lacked a finishing touch of resilience. At peak periods its IT systems were unable to cope with high order numbers on the website and the flaschenpost app and always keep its promise to deliver within 120 minutes. A new Cloud-based IT infrastructure combined with IoT wearables and handhelds for order picking and delivery solved the problem. flaschenpost now has no difficulty in coping with market fluctuations and in handling large numbers of orders with ease. It has optimized all of its processes: from orders to deliveries. In addition, flaschenpost uses AI-assisted route planning software so that drivers can always take the shortest or the fastest route and the firm never misses out on orders.

Resilience can also mean positioning yourself on a broader base and expanding your business model. That is something companies along the supply chain can also accomplish – with the aid of IoT technology. When Ernst Meister GmbH connected its lubricant tanks on the Internet of Things, its first objective was to ease the administrative burden and deliver lubricants to its customers in line with demand. That was a success thanks to ultrasonic fill level gauges which ensure that the company always knows the fill levels of tanks at its customers’ premises. Customers don’t need to call for a refill and Ernst Meister doesn’t need to supply more lubricant if in reality there is still enough in the tank.

This IoT solution has also enabled the company to expand its business model. If Ernst Meister receives an enquiry from a potential new customer it is now better able to estimate demand on the basis of comparable existing customers’ consumption. And now that deliveries to customers can be prepared more effectively Ernst Meister can plan to collect waste oil and dispose of it in an eco-friendly way, thereby building another bridge to sustainability by means of the Internet of Things and Green Logistics.

Be it by GPS tracking, an IT upgrade via the Cloud or fill level gauges, solutions of this kind that enable companies along the supply chain to operate more efficiently often also help them to reduce costs. In view of inflation, soaring energy and other costs in recent years that is yet another literally valuable advantage.