IoT: The fast track to digitalization?

One of the most widely used buzzwords in the logistics sector in 2022 is “digitalization.” The word is a useful umbrella term for the evolution to computer-based processes from manual procedures that relied on pencils and clipboards in the warehouse or printed manifests at the loading dock.

But references to the trend nearly always ignore the tactical steps needed to make digitalization happen. Your DC probably doesn’t have a magic wand that transforms basic paper checklists into cloud-based software platforms. So how are practitioners driving toward the goal of pulling logistics processes into the 21st century?

The answer in many cases is the internet of things (IoT), a network of web-connected sensors that can be attached to anything from crates and cases to forklifts, conveyors, and locomotives. Sure, it’s another industry buzzword, but the IoT has accelerated out of the garage and onto the racetrack in recent years, fueled by the falling price of sensors and the blazing speed of fifth-generation (5G) cellular data networks. A quick look around the supply chain sector reveals many examples of ways in which the IoT is already earning its keep, helping to speed deliveries, save money, and—yes—digitalize logistics. 

MAKING THE RIGHT CONNECTIONS

One of the prime use cases where IoT solutions can deliver digitalization is in trucking—a sector in which sensors are fast becoming a critical tool for monitoring far-flung operations. So it’s no surprise that a recent report from the Swedish information technology (IT) specialist Ericsson found that cellular IoT connections continue to grow exponentially in the transport industry, where they’re expected to increase to 292 million in 2030 from 100 million in 2020. 

That improved connectivity has the potential to ease the complexities brought on by disruptions in the logistics supply chain, according to the “Connected Truck Transport” report, which Ericsson prepared in partnership with ZF, Orange Belgium, and Arthur D. Little. With better data from IoT sensors, truck fleets could operate more efficiently and help offset the impacts of high fuel prices, driver shortages, and government regulations, the report said.

The number of IoT connections will grow as older trucks are retrofitted with sensors and new trucks are equipped with fleet telematics, the report also said. In both cases, the new cellular IoT connectivity will give fleet managers and drivers access to data from an array of onboard sensors. According to Ericsson, the investment could pay off through overall cost savings of more than 6% for a mid-sized trucking company, with one-third coming from driver-assistance capabilities like accident and traffic avoidance, and two-thirds from truck and trailer monitoring.

DUDE, WHERE’S MY TRAILER?

One such asset-monitoring solution is the IoT system developed by telecommunications vendor Globalstar in partnership with TGI Connect, a Canadian company that provides asset-management solutions to the transportation industry. Under the arrangement, TGI uses Globalstar’s tracking devices and satellite network to map the locations of clients’ freight trailers.

Globalstar says the savings add up quickly, since millions of trucks crisscross North America every day. And every time a load is late or lost, carriers must walk through their yards looking for available trailers, call customers to see if they are detaining trailers, or lease extra trailers to ensure on-time delivery. To help clients avoid those extra costs, the partners keep tabs on the global positioning system (GPS) coordinates of each trailer through a solar-powered sensor attached to each unit.

Railroads are also using sensors to digitally track and monitor freight movements, according to Nexxiot, a Swiss provider of IoT hardware, software, and analytics. Rail networks span vast distances, with 140,000 miles of track across the U.S. freight network alone, and that sheer distance has traditionally made it difficult for rail operators to monitor their locomotives, cars, rails, and freight. But attaching connected IoT sensors to those assets now allows companies to monitor their operations in real time and identify opportunities for trimming costs as well as improving sustainability and safety, a Nexxiot white paper says.

For instance, companies can now detect safety problems like a handbrake activation issue, a train traveling past safe speed limits, or an abnormal shock as a result of an impact. With the information provided by those near real-time alerts, railroads can respond on a timely basis, Nexxiot says. 

And more sensors are coming. Rail carriers can already track locomotive performance through sensors that monitor throttle position, track speed, and fuel level, but they have only recently added sensors to nonpowered assets like railcars not connected to an engine. An initiative called “Rail Pulse” aims to create an industrywide IoT data-sharing platform for railcar telematics. Participants in the joint venture, which was founded in 2020, include the industry’s seven Class I railroads: GATX, Genesee & Wyoming, Norfolk Southern, The Greenbrier Companies, Trinity Rail, Union Pacific, and Watco.

BUILDING THE SMART WAREHOUSE

Logistics service providers are also applying IoT technologies to warehouse operations. One example is a joint effort by DHL Supply Chain and lighting systems provider Signify to create a DC with “smart” lighting. For the pilot, which was conducted at a 338,000-square-foot DHL Supply Chain facility in Lockbourne, Ohio, just south of Columbus, the companies installed internet-connected motion sensors in an effort to improve illumination, boost safety and productivity, reduce CO₂ emissions and energy consumption, and cut operating costs.

And while switching off the lights when you leave a room sounds like advice you might get from a scolding parent, the strategy paid off due to DHL’s large scale. The pilot project has slashed energy costs by 49% at the test site. And with DHL’s big footprint—the company operates 500 sites in North America, covering over 140 million square feet of real estate under management—greater savings could come in the future.

IoT sensors are also a key part of a “smart warehousing” project at Fabriek Logistiek, a Flemish logistics technology testing facility in Ghent, Belgium. In a recent initiative, technology vendor Pozyx installed real-time location system (RTLS) devices to create a “warehouse orchestration system.” 

The Pozyx RTLS sensors track bins, orders, pallets, returnable packaging, and vehicles both in the warehouse and on the road, providing a detailed overview of pallet and goods locations and their movements. Among other benefits, the RTLS system simplifies inventory management and can lead to better space utilization, reduced costs, and increased safety in the warehouse, Pozyx says. The company adds that the system will also allow users to evaluate and analyze material handling routes to enhance process workflows, resolve bottlenecks, and optimize the warehouse footprint.

Yet another way that IoT technologies are promoting the development of digitalized supply chains is by supplying the data that feeds automated operations, according to Patrick Hoffmann, senior vice president at the procurement and supply chain consulting firm Proxima.

“Most organizations lack transparency due to limited data and, more often, the skillset to interpret the data to define their organizational strategy,” Hoffmann said in a statement. “As organizations become even more lean, digital solutions such as artificial intelligence, machine learning, and robotic process automation (RPA) become more relevant for assuming transactional tasks. Repeatable processes can be automated to a degree to allow the human resources to focus on more strategic tasks that require specialized knowledge and the ability to interpret results.”

The proliferation of cheap, powerful sensors at every link of the supply chain is changing the way shippers and logistics service providers manage their daily business. Buoyed by a flood of instant data from IoT networks, managers of truck fleets, railroads, and DCs have suddenly gained the ability to see deeper into their own operations than ever before. And that digitalized approach is driving improvements at every step of the way.