Internet of Things (IoT): A Possible Backup Plan for Supply Chain Crisis
Alexa, have our containers arrived?
Picture this: You need to get a new shoe, so you visit the nearby store where the store owner gets supplies from another supplier in Lagos or Onitsha, who also gets their supply from an overseas company. The company also sources its raw materials (hides and skin) from a warehouse within the state, or from manufacturers in Italy who get their supplies from a neighbourhood farm where the animals are raised.
We know it sounds like an extremely long chain, but a lot of our final products go through various stages before landing in our hands.
Just like the word “chain” brings to mind an image of a sequence or string, the supply chain is a series of activities, people, and resources required to move a product or service from its initial state to a final consumer.
Now to the crisis part…
A supply chain crisis happens when the movement of products, money, and services is disrupted. The interesting thing about the supply chain is how interconnected it is. So, while direct suppliers to businesses might be on track, a business can be affected by defaults or disruptions from their supplier’s supplier (I Hope that makes sense?).
The contagion effect plays a big role in supply chain issues as a disruption could happen at one part of the supply chain which then ripples through the rest of the supply chain.
The Ride so far…
In the not-so-distant past, with the outbreak of Covid-19, people and businesses were forced to halt their activities almost immediately, and as a result, causing the global economy to decline. With productive activities coming to a stop, and people losing their jobs came a high demand for surgical masks and other protective materials. As a result of all these, supply shortages and increased prices became the norm.
Automobile producers have had to ship out cars without certain computer chips with the promise to send them when supplies are available.
You must have heard of the recent war in Ukraine and its effects on the supply chain. In a recent daily newsletter, we shared the effects of the increase in wheat prices as a result, causing food prices like bread to go through the roof.
If you don’t live under a rock, you must have also heard of the fluctuations in oil prices as a result of the current situation in the war-torn country, which has caused disruptions in the supply of oil and gas, majorly due to sanctions.
In a recent article, the economist explains that with new lockdowns in China, as a result of the surge in Covid cases in Shanghai, we might soon be expecting another round of supply chain strains.
A backup plan?
Having explained the supply chain crisis, we’ll now explore a possible solution to the problem. The plan? Internet of Things.
Internet of Things or IoT is a system that allows internet-connected devices, also called Smart things, to gather, send and act on data from their surroundings using intelligent systems such as CPUs, sensors, and communication hardware.
Everyday objects from medical equipment to smartphones, self-driving cars, watches, security cameras, and factory production lines, can be made smart with IoT technology. The internet is used as a communication channel that enables these objects to function with little to no human intervention.
Businesses are using IoT to run more efficiently, gain a deeper understanding of customers to provide a better customer experience, improve decision-making, and boost the company's value.
How does IOT stand to transform the supply chain ecosystem?
Imagine ordering a package online that gets delivered efficiently with the help of machines, or a global economy without long queues of ships or disruptions in the flow of goods at the ports, as everything will be done automatically (By the way, things like these don’t always end well in the movies, but think about its potential).
Picture this: Shipping, inventory viewing, and tracking in real-time: Devices that use the Internet of Things (IoT) can identify, monitor, and report on the location of products wherever they are (Imagine Alexa giving an answer to the question in our header).
As for automobile producers, the IoT presents an opportunity to connect suppliers with end-users, leading to cost reduction, as well as increased speed and ease of integration through information-sharing systems via the cloud. Producers can also have a reliable supply chain, and track delays ahead of time, enabling proper planning and alternative action plans.
When it comes to food shortages, IoT could be utilized to find as many suitable temperate conditions as possible to diversify food production across the world, avoiding total dependence on one, or a few countries. This could also be applied across various sectors.
Disruptions and errors in the supply chain ecosystem can be minimized, and possibly eliminated with advancements in technology. The IoT provides a channel through which continuity in economic activities like production and distribution can be attained, despite the occurrence of unexpected circumstances like the ones mentioned above.
Despite being a seemingly far-fetched reality, especially for a country like Nigeria, there’s no denying its potential. We think that exploring IoT will be a step in the right direction and we’ll also be glad to hear your thoughts, so let us know what you think.