Sensors are proving to be one of the most widely adopted emerging technologies impacting supply chains today. The sensors provide data on the location and the condition of a company’s supplies and products as they are transported around the globe. Jim Hayden, vice president of solutions at Savi Technologies, a sensor analytics company, said sensors allow companies to gain end-to-end visibility of their supply chains. It’s a benefit more organizations are taking note of and continuing to drive adoption rates up.
A recent Deloitte and MHI report identified sensors and automatic identification as a top technology creating the “always-on” supply chain. Sensors are used by 44% of supply chain organizations, according to a survey of 900 supply chain industry leaders. The adoption rate falls just behind cloud computing and storage, used by 45% of organizations. A large number of organizations plan to implement sensors into their supply chains in the future, too. Eighty-seven percent of survey respondents said they plan to use the technology in the next six to 10 years.
In 2013, about 20 million sensors were estimated to be in use in supply chains. In 2022, that number is expected to grow to 1 trillion, and by 2030, the Deloitte and MHI report projects 10 trillion sensors to be deployed.
What’s Driving Adoption?
Hayden said companies have historically relied on “milestone” information of their shipments — these are general notifications that inform a company their container departed or arrived at a certain port within the last day or two, for instance. But as supply chain risks grow and companies look to gain competitive advantages, more are realizing they need to do better than capture “milestone” data. Sensors can provide arrival times within hours, instead of a day or two, Hayden said.
Savi provides both sensors and the data analytics solutions that give companies visibility into their supply chains. Hayden said companies come to Savi to tackle risk and supply chain security as well as to improve supply chain performance. On the risk and security side, Hayden said sensor technology can alert a company if their goods have been tampered with during shipment or was the victim of cargo theft, for instance. Some companies, say those in the food or pharmaceutical industries, also want to be alerted to changes in temperature and humidity as those factors can cause damage their products. Sensors are able to alert companies to these changes via text message, email or through an app on mobile devices, Hayden said, giving them time respond and prevent waste. The goal is for companies to know as soon as possible if something has happened or is likely to happen to their shipments, he said.
Barriers to Adoption
While the benefits of sensors and the data they generate may be clear, Hayden said there are still some barriers to broader adoption of the technology. Many see deploying sensors as a part of risk management, which can be tough to demonstrate clear and quick ROI on. Companies still see the technology like insurance, Hayden said. It isn’t until a company experiences a supply chain disruption or negative event that they realize they need to manage their risks.
Cost is another barrier to adoption. The Deloitte and MHI report said companies are concerned with the cost of deploying sensors as well as the costs associated with the maintenance of networks and storage space required to collect and communicate the data the sensors generate. Additional investment in analytical tools to make sense of the sensor data, too, is needed.
However, the cost of sensors has already fallen over the years. The price of an accelerometer, which can sense acceleration, shock and vibration, has declined 80% since 2006, according to the Deloitte and MHI report.
“The price of moving data across networks and of securing storage space has also plummeted and there is little reason to think the costs of technology will not continue to decline,” the report said.
Hayden said Savi Technologies’ customers are generally viewed as the “early adopters” of sensor technology and data analytics. However, these “innovators” are realizing they need this technology in their supply chains to keep a maintain a leg up on the competition.
“Even if there is not a real empirical return on investment, they know in their gut it’s the right thing to do,” he said.