Pearson on Excellence: Using M2M technology to improve supply chain performance

They may not recognize the term, but a lot of logistics and supply chain executives are concerned about “permanent volatility.”

They know, for example, that constant fuel-price swings compromise their ability to manage supply chain costs. They fear that their companies’ security systems won’t be able to cope with a growing onslaught of cyber invasions. They understand that more weather events and political threats mean new visibility problems and supply disruptions. And they’re keenly aware that rapid globalization requires the frequent readjustment of supply chain strategies and supply chain resources.

It all falls under the banner of permanent volatility.

Leveraging wireless machine-to-machine (M2M) technology—automating information exchanges between pieces of equipment or with a control center—can be a great way to deal with permanent volatility. M2M is not new; in fact, factory control systems like programmable and numerical controllers have been around for decades. However, there are many new reasons to embrace the technology.

The most salient is 4G mobile technology standards. M2M is increasingly synonymous with “wireless” which, compared to hardwiring, offers broader coverage, less implementation effort, lower operating costs, increased standardization, and simpler enhancements and upgrades. Small wonder that researchers are predicting that use of wireless M2M will increase by 25 percent to 30 percent annually.

In addition, new M2M innovations and applications are being developed at a rapid rate. This means ever-improving performance, new sensing capabilities, increased affordability, and new opportunities for near-real-time information sharing. M2M technology is a multi-faceted way to address supply chain management’s most pressing challenges and subsequently raise shareholder value in the following:

Fleet tracking: Monitoring fleet arrivals/departures and flagging exceptions can improve end-to-end visibility and improve planning.

Event-based monitoring of driver behavior: Documenting speed, idle time, and hard braking of delivery vehicles can reduce fuel and insurance costs, while increasing driver safety.

Field force management: Overseeing field-force activities from a centralized location can make it possible to practice real-time routing based on traffic information.

Inventory-level monitoring: Viewing and communicating inventory levels can help companies build automated replenishment programs and share information with suppliers.

Tagging high-value assets and inventory: M2M systems can help companies keep track of particularly valuable assets, such as computers, data-storage devices, consumer electronics, and ATMs.

Inventory-condition monitoring: By tracking inventory longevity as issues associated with humidity, temperature, pressure, and light, companies can do a better job of overseeing product shelf life and maximizing the efficacy of medicines.
Preventive maintenance: Monitoring equipment remotely and proactively improves an organization’s ability to ward off failures and improve scheduled (preventive) maintenance.

Smart warehouses/supply chain facilities: Through remote metering and control, companies can optimize energy use in warehouses, production facilities, and other locations, thus reducing operating costs.

The following high-level framework could help companies set the stage for a new or enhanced M2M capability:

1. Understand the unique challenges and business requirements associated with your company’s supply chain. After all, you’re basically building a custom solution since M2M involves a variety of applications.

2. Develop an M2M strategy. The overarching goal is to turn enhanced visibility, data, and analytics into better insights and faster execution. A global roadmap and detailed business case are needed to demonstrate how—and at what cost—this can be made to happen.

3. Consider what supply chain modifications may be needed to maximize M2M’s contributions. Every component of the supply chain should be examined: network and asset configurations; risk management approaches; organizational structure; business processes; IT architecture; performance management programs; intra-and inter-company collaboration mechanisms; and data sharing with business partners.

4. Pick the right partners. A comprehensive M2M solution requires more than an internal or contract systems implementer. A variety of collaborations across the value chain—device, network, application—may be needed to ensure end-to-end coverage.

5. Develop a detailed implementation plan. A top priority is complete integration with the company’s supply chain systems and business processes. Another is using a phased approach to minimize risk, capture quick wins and gain experience.

Lastly, remember that today’s M2M goes far beyond the factory floor—machines controlling machines. Huge strides in wireless technology have helped make M2M an increasingly crucial information-management tool. It’s now a way to subtract costs and risks and add greater amounts of visibility, standardization, and predictability. As much, or more, than any other solution, M2M is a potential antidote to permanent volatility.