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Benefits offered by the IIoT in supply chain management

Those involved with the Industrial Internet of Things (IIoT) do not have much to laugh about – at least, this is the impression you get if you google “IIoT funny”. Thanks to the search engine’s erroneous interpretation, the first hit references “214 pictures of idiots”, while the second, which starts with the term “connectivity”, states at the end: “Missing: funny”.

IIoT therefore appears to be an extremely serious subject. This reflects the trend from a commercial perspective. For example, if you look at the latest IDG study relating to the IoT, the following items are right at the top of the very specific wish list provided by the companies questioned: “increased efficiency in existing business processes” and “general reductions in cost”. By contrast, ideas regarding potential process changes and the redefinition of business models take a back seat. Increased emphasis is placed on quick wins over medium and long-term strategic and structural changes. Companies are looking to the money again. There are no more fun and games with IIoT, it would seem.

In the field of supply chain management in particular, the current ideas regarding the IIoT can be easily implemented. Those responsible for optimising international trade flows and for complex logistics chains from the customer via the trading platform and the supplier through to the external warehouse operator and one or more logistics companies know that there is still considerable potential for efficiency gains and reductions in cost in this area. Companies, customer, warehouse operators, suppliers and subcontractors exchange active data: order data, shipment information, freight lists, receipt logs, customs documents, invoices, credit notes – a huge variety of information, which is moved around in a variety of formats, even including programmed interfaces and heterogeneous systems. Media disruptions – for example, with printed freight documents or incompatible systems – are still an everyday occurrence.

Quick wins in the supply chain

It is small wonder, therefore, that something is always going wrong when information is being sent via dozens of systems with hundreds of software programmes that have thousands of version numbers: The customer’s product was not delivered because the system did not apply the house number or part of the street name, which was too long. One example is the town of Dingolfing in Bavaria, where there is a street called “Bischöflich-Geistlicher-Rat-Josef-Zinnbauer-Straße”. Or perhaps the stock list was not updated because the server was down. Or the shipping agent was not notified by the customer due to incorrect mapping. All of this costs money, time and stress. It is also frustrating for the customer. Those looking for quick wins with IIoT in the form of increased efficiency and general cost reductions should start here.

Furthermore, standards for formats are not always guaranteed in international data exchange. Parts arrive that are urgently needed for production, but when the box is opened, it contains the wrong thing. If the box has been delivered via the German branch of a manufacturer from the Far East, for example, good advice and rapid service are expensive. These and similar problems arise if the data systems of the warehouse in the Far East are unable to communicate with the international branches, if files are damaged en route or if there are problems with individually programmed interfaces between the German distributor and the Asian parent company.

Increased customer satisfaction, reduced service costs

The optimisation functions with little effort by increasing the reliability of data availability by means of software control when the local data integration software automatically queries data on a global scale on the respective servers in a time-controlled manner and transfers it to the required formats. And if the Japanese or Chinese server cannot be reached, the IT manager automatically receives an email or SMS from the system. If the system also allows alternative options as automated routines, the optimised networking increases customer satisfaction and reduces service costs.

Dream team: data integration plus SCM

An additional factor: In national and particularly in international trade, data must be correctly interpreted so that the right products are in the right place at the right time in the right quantity. In addition, the German subsidiaries sometimes also need the supplied data in different formats – for example for saving in SharePoint in xls format and, at the same time, for automatic processing in XML or EDIFACT. This data can then be accessed in turn by end customer. These requirements are part and parcel of everyday business in multinational corporations. Seamless data integration with professional standard software is essential here. As a second step, compatible SCM software, which can preferably be directly linked to the data integration software, functions as an efficient switchboard of heterogeneous supply chains, enabling seamless collaboration of all partners.

Clean supply chain management: chemistry is right here

It is also the case here that programming regularly impedes the development of structures. Software that can simply be configured and adapted to the respective requirements in a flexible manner has a clear advantage. In a best-case scenario, SCM portal software that can only be configured is able to control the entire supply chain and prevents errors. Take the example of a chemicals manufacturer that wants to send 2,500 kilos of cleaning agent as part-load transport. The respective chemicals manufacturer employee enters the manufacturer’s data independently into a web interface for the manufacturer’s logistics provider created in the SCM software.

This web interface has the exact fields and functions required by the logistics provider for its daily work and guides the customer through the order. If a comma is inadvertently entered at the wrong position during data input, 2,500 kilos quickly becomes 25,000 kilos. Many systems do not recognise these kinds of errors and finalise the order. It is an advantage if the SCM system automatically reports this error and indicates that it can no longer send this quantity as a part-load consignment because the consignment must not be heavier than 2,500 kilos. In this instance, the employee can correct the incorrect entry and does not have to initialise wholesaling for the cleaning agent.

Anyone considering IIoT for supply chain management will therefore equip their system with the rules for part-load consignment. The system will then know every detail that the logistics provider needs to consider for its operating activities, such as the number of packages, the package types to be used, the maximum length, width and height of the consignment as well as transit times and departure times for export consignments. The SCM software then inspects each customer order for all specified parameters as well as the company guidelines for transporting hazardous goods in the case of chemical products, for example.

On the active side, efficiency gains and positive cost effects can be achieved as a result of the streamlined order processing, which is made possible by integrating the entire supply chain. Moreover, the SCM software is also designed to offer passive support by detecting discrepancies of any kind. Take the following situation as an example: A customer indicates that the logistics provider should deliver the product the next day and notify the customer by telephone a day in advance, but this is technically impossible, as the product is being transported overnight. The SCM software is designed to make the customer aware of this immediately. As a result, the user immediately discovers which additional options are possible and which are not, thereby reducing subsequent work and making the transport processes more effective.

The essential factors for cost savings and efficiency gains when optimising the supply chain are therefore transparency, easy operation, system speed and the ability to respond to future requirements in an agile and flexible manner by means of simple configuration.

10 tips to keep in mind for supply chain management software:

1. As a basic principle, good supply chain software should be capable of being deployed across systems (i.e. end-to-end) and immediately – without any programming knowledge on the part of the user. Choose a software package that can be completely configured by the end user.
2. Test your preferred software and only shortlist a solution that can be operated in a simple and intuitive manner, e.g. using drag & drop functions.
3. Make sure that the system is truly capable of incorporating all flows of raw materials, components, semi-finished and end products, all information from any kinds of systems and all those involved along the entire value creation and supply chain from the raw materials supplier to the end customer – from start to finish.
4. Look out for integrated data management to enable seamless collaboration of all partners in a supply chain. Important: The systems of partners should be able to remain unchanged – both nationally and internationally.
5. Make sure that intelligent workflow technologies help you to minimise user interactions in order to make the process as efficient as possible by means of a high degree of automation.
6. The SCM software must recognise inconsistent data or incorrect data entries and either warn the user or, better still, independently rectify the error in an automated manner according to corresponding rules. This saves money and avoids stress.
7. Integrated time zone support makes it easy to extend the area of operation to other countries.
8. It is good if the software greets your international colleagues every morning in their respective native language. In our globalised world, multilingualism is an absolute must.
9. It must be possible to integrate the respective business objects, such as a delivery note or consignment, into processes, interfaces or workflows in a flexible manner via configurations and without programming as well as to change them again.
10. Opt for the use of a standard software system for data integration and management rather than in-house programming. This saves money and avoids stress if processes have to be changed. And they will have to be changed at some point.