A 30-fold increase in online devices by 2020 will alter how the supply chain operates

The internet of things (IoT) is forecast to reach 26bn installed units by 2020, up from 0.9bn just five years ago, and will impact the information available to supply chain leaders and how the supply chain operates, depending on industry, forecasts Gartner. 

“It’s important to put IoT maturity into perspective, because of the fast pace at which it is emerging, so supply chain strategists need to be looking at its potential now,” said Michael Burkett, managing vice president at Gartner. “Some IoT devices are more mature, such as commercial telematics now used in trucking fleets to improve logistics efficiency. Some, such as smart fabrics that use sensors within clothing and industrial fabrics to monitor human health or manufacturing processes, are just emerging.” 

Gartner believes that a double-digit increase in digital marketing investment will provide supply chain leaders with deeper market insight, as well as fulfillment challenges in industries where more granular market segments are targeted. 

Digital marketing budgets are expected to continue to increase in 2014. A rapid move to digital marketing has direct implications for the supply chain, particularly for consumer product industries with rapid cycles of go-to-market and promotional activity. B2B industries adopting digital channels to reach customers will also be affected. 

“Supply chain leaders must design their processes to operate in this digital business world,” continued Burkett. “This includes fulfilling the new expectations of customers and the volatile demands that digital marketing will create. A future supply chain will meet those expectations by converging people, business and things in a digital value network, and incorporating fast-emerging capabilities such as IoT and smart machines into this design strategy.” 

The supply chain team can use digital marketing customer information to refine its own segmentation efforts and to enhance demand planning. In this way, the team becomes market-driven itself, by understanding channel programs and using this as an early indicator of demand. 

Digital business will also disrupt the design and manufacturing of products during the next five years. First will be the use of digital product models for use in 3D printing (3DP) and for simulating hybrid digital-physical software-embedded products. The promise of 3DP is to achieve supply chain bliss by postponing a product’s manufacture to the latest point in the supply chain. If 3DP delivers on this promise, it would disrupt entire supply chains by responding only to actual demand, thus eliminating excess inventory and plant capacity. 

Shipments of 3D printers are growing rapidly as these technologies emerge to find their right fit in manufacturing and the extended supply chain. However, supply chain strategists should recognise that 3DP is still in its very early stages and is currently applicable to only select materials and manufacturing process technologies.
The second disruption will be the process of designing embedded software into physical products so they participate in an intelligent network to add value to a digital business. 

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