IOT (The Internet of things) has trended very popularly with manufacturing and businesses. A research firm (Gartner) has researched the huge surge and predicted that by 2020 a supply chain system would operate significantly different than in the past.
How does IOT impact the supply chain system presently?
Currently IOT offers the following:
- M2M (machine to machine) contact
- Devices can be monitored, and instantly recognised if not running correctly.
- Everything will be internet connected.
- Supply chain leaders can gain much more information on their technology.
In 2015, the IOT market was sized at $900M – McKinsey (see source) predicts that by 2020 the industry will grow to over $3.7B.
A downstream supply chain system
Downstream just means where the company takes part in production; upstream is manufacturing raw materials, whereas downstream is closer to the end user.
Although IOT is very vast amongst business and isn’t a one size fit all, we can use the oil industry as an example and how the players have benefited from using the internet of things.
Upstream supply chain system
Production and exploration
Midstream
Transportation and storage
Downstream
Petroleum retailers and refineries
Let’s look at the benefits of IOT for Petroleum retailers.
The figures:
In previous years’ oil rose to $100 per barrel. However, new technologies recently enabled prices to drop to $20 – $30 per barrel.
This has resulted in well-performing oil companies to preserve top and bottom lines.
Source here
How does IOT help with a downstream supply system?
It will solve a lot of challenges that petroleum retailers face, especially with the following factors:
- Outlets will be better at organising assets.
- Easily manage supply chains.
- Better customer relationships.
Most lucratively, IOT will provide information on every element of their business.
This can include monitoring of petrol pumps, equipment, health and safety, precise logistics handling, stock control and IT equipment.
Can it help downstream players with marketing?
The new IOT system offers more efficient advertising, by expanding visibility into the hydrocarbon supply chain and reaching new consumers through digital marketing.
This is just sticking to the example of a petroleum company; it can fit any business to improve performance, reliability, save costs, and work to maximum efficiency.
How IOT can change how downstream view suppliers
The system can provide retailers of all the suppliers available, an accurate reading of delivery, who’s got the best value stock and to check their reliability.
This will cause much heavier competition between the suppliers, as areas where they lacked before, will need more attention because of higher visibility to clients.
In Summary
Looking at why and how IOT can help a downstream fast supply chain system, we can see the countless benefits it can do to improve a business – and it doesn’t stop there because it’s only still the beginning with this new technology.
When we do reach the year 2020 (when the IOT industry is expected to expand in value by $3), the technology available will ultimately change how the business landscape works altogether.
Keywords:
IOT, supply chain system, the internet of things, upstream supply chain system, downstream supply chain system, How does IOT help with the downstream supply system? How IOT can change how downstream view suppliers, hydrocarbon supply chain, improve business performance
