Welcome to the New Era of IoT in the Supply Chain

Today’s digital landscape surrounds us by all kinds of devices that are connected to the Internet: our phones, computers, and even our crock pots. This wide-ranging Internet of Things (IoT) is already impacting our daily lives as consumers so much that manufacturers are now working on ways to incorporate it into their daily operations. For them, this may seem like a daunting task to implement in its infancy, but the benefits extend far beyond what can be predicted today. Utilizing this technology means every aspect of a shop can be connected, from the quoting office to the shop floor and even to delivery trucks – and there’s the catch: Manufacturers use and produce a tremendous amount of data daily that can be very insightful, but they must be careful to utilize relevant data that is most important to everyone’s needs. With this in mind, ERP suppliers must communicate closely with each of their users to ensure that their key performance indicators (KPIs) are defined properly. What one shop may define as a KPI another shop may not.

The main function of ERP is to report and analyze relevant data because informed decisions are only as good as the data being used. For this reason, ERP suppliers must function more as consultants to their clients as opposed to a software supplier. Given the intricacies of these solutions, it is imperative that suppliers engage closely with manufacturers to ensure that their system is tailored for their specific operations. It is important for suppliers to convey how long implementation will take, because this is not a boxed solution that can be downloaded, installed, and running optimally with the click of a mouse. With IoT, every aspect of the shop floor can be connected to the Internet and integrated with other systems, from CAD/CAM to the ERP – an integration of resources that can greatly reduce redundancies.

For instance, when a purchasing manager accepts a shipment of raw material, they can input that information into their ERP system, which will update the cost in all other systems. Having machines on the shop floor connected to IoT allows pertinent machine info (cut speed, availability, maintenance schedules, etc.) to be reported back to an MES and ERP system. When a request for quote hits the quoting manager’s inbox, they can quickly create an accurate quote because the system has already been configured and updated with cost of material, machine availability, machine cost, labor cost and schedules – all without having to hold meetings or duplicate data-entry efforts from one system to the next. This huge amount of data being collected will concern ERP suppliers as far as how to store it, host it, and make it accessible to clients. With the rise of cloud technology across all industries, it is imperative to find a supplier that is forward thinking in developing systems that are cloud-based – which brings up the question of security.

A common misconception is that storing data in the cloud creates potential threats to security when, in actuality, it decreases potential threats while reducing the amount spent on staffing an in-house IT team. These connections open a new world for supply chain logistics in this Amazon.com era. If every aspect of the supply chain is utilizing IoT, a service center will be notified when a clients’ inventory of a specific material is low and then automatically generate and send a quote to the purchasing manager for approval, quickly accepted, and shipped – all within a matter of minutes, maybe even seconds. Better yet, the purchasing manager can set rules for automatic acceptance of quotes to not exceed a certain dollar value, delivery date or stock level to further automate the purchasing process. These technologies can also be supplied for other consumables, such as lenses for laser cutting, to gather data on the average life span of a lens and set up automatic renewals and shipments. This same data can be used by lens suppliers to further improve their product through research and development initiatives.

Alternatively, suppliers can create an online portal for buyers to upload their own part geometry and generate a quote without human intervention. This allows customers to shop around quickly while choosing the best supplier for their budget or deadline. Expect to see the utilization of cloud and edge technology in ERP applications in the short-term, as well as providing software-as-a-service (SaaS). Continual technological updates and advancements make it difficult for smaller companies to keep their systems updated, but shifting to a cloud-and-edge computing architecture helps alleviate expenses that come with equipment upgrades, IT staffing, and security suites. Storing information in the cloud allows for accessibility from anywhere they have an Internet connection. Not only is accessibility easy, the network is managed by a specialized IT team that focuses on keeping the information secure. After all, if said cloud supplier were riddled with security threats, they wouldn’t be in operation very long because consumers don’t want the potential exposure.

Alternatively, edge computing can be utilized for programs that consume a lot of processing power. This allows manufacturers to connect remotely to a more powerful system and utilize power intensive software without having to maintain the latest in hardware. Switching to a SaaS model allows for software updates to be done automatically without disturbing daily operations.

Long-term changes that can be expected are the standardization of manufacturing data, utilization and accessibility of data, and machine tool builders sharing machine data to ERP suppliers. The standardization of data management improves visibility across the supply chain. After gathering data, systems must be in place to ensure the utilization of this data is for the greater good of progressing the industry. This type of information includes partnering with machine tool builders to track and record data. Once these partnerships are made with machine tool builders, ERP suppliers will be able to produce more accurate estimations. This collection of data will allow machine tool builders to optimize their operations, in turn improving their machinery and the experience for their customers. By working together and creating standardizations, each supplier can focus on what they do best while transforming the industry for greater efficiencies.