Increasing the Supply Chain Performance through the Internet of Things

In the fourth industrial revolution, integrating each process of the business process owned
by a company is must to sustain the hard competition among each other. Once the existence of
a company appears and ready to serve the consumer, they will directly be a part of the global-
scale community. Even though that is a small company which just establish a month ago, they
are forced to participate in the tides of the globalization. Besides, they also become a member
of a wider range of supply chain network [ CITATION Lam00 \l 1033 ]. The role of the supply chain
for a company and community is very important as a wrong decision made by the company will
affect other related chain and its company itself. It can be said that supply chain management is
the core heart of a company to be sustained.
Unfortunately, many stakeholders are not realized in the important role of the supply chain.
They are lack of knowledge in their company’s supply chain. Most of them are still struggling to
realize and learn their supply chain visibility. Knowledge management is important for a
company as a new kind of resource. Since it is viewed as a dynamic complex network that
involves many parties, knowledge management is necessary to help the decision-makers within
the network to create their decision.
Moreover, in today’s era, those weaknesses may slower the potential development of the
Industrial Revolution for stepping the next level [ CITATION Wor17 \l 1033 ]. That is not all, the
issues faced by a company in this era are still so much and variant. The customers which
become one of the reasons for the existence of a company offers more complex challenges and
problems that may affect sustainability. Demand from customers is always changing depending
on the current trend. Customers are more demanding than yesterday in terms of quality, cost,
and uniqueness [ CITATION Chr16 \l 1033 ]. A company that expanding their business could also
taste new problems occur. It is not easy to find a new place as the targeted market and place
where a new facility is built. They have to know the potential customer, trend, transportation
route, resources and other factors [ CITATION Ben19 \l 1033 ].
The agility of a company to find the solution and alternatives action to face the challenges is
necessary to make the company can survive. It can be done through a comprehensive
assessment of the structure in the chain that the company had, including the supportive system
like the information and knowledge management. Then, maintaining the effectiveness of
collaboration among each internal department and external parties should also be conducted
to ensure the chain can be running well.
The growth of an era seems like bringing a dozen of problems and challenges for a
company, virtually it is also giving the benefits for a company to develop and expand more.
Fourth Industrial Revolution is not just about the competitive atmosphere in the market, but it
also allows bringing forth more innovation. One of the product from this phenomenon is the
internet of things. It encompasses the whole activity without exception and also becomes the
solution for most of the problem that is faced by a company with their businesses. Through the
internet, a company can access any kind of information to be able to analyze the trend in the
market, planning for the expansion, accelerating a process rate and other. Information
technology (IT) has been and will always become the core factors for a company to run its
business. An effective and efficient supply chain management can be achieved with the help of
information technology through IoT [ CITATION Ros16 \l 1033 ].
In recent years, countless technology-based companies emerge within the global market
and a new battleground unlocked for competition. It is forecasted for the industrial sector to
have double revenue from $3.5 trillion in 2016 to $6.6 trillion by 2030 as the effect of
technology utilization. Facing this fact, an old player in the market is forced to take action and
adopt them to make their business sustains [ CITATION Atl18 \l 1033 ]. The desired state of an
effective supply chain may achieve by implementing technology, particularly the internet of
things. When the implementation is conducted for a company, they will able to have better
coordination and communication between each process in the chain, departments, vendors
and even the facilities itself. Internet of Things allows them to be linked and provides a new
environment for the decision-maker [ CITATION Ban14 \l 1033 ] . This system shifts the SCM
practices from traditional to automation.
Within the framework of the internet of things, big data has a critical role to ensure the
implementation will run wells which include the sensors, cloud system, data collection and
decision making software. It results in the massive amount of data will be produced and should
be cultivated. The analytical tools are needed in this phase as the supportive variables. Through
these tools, the movement and information of a product inside or outside the facilities can
easily be tracked [ CITATION LiB17 \l 1033 ] . The information would be useful for other aspects of
supply chain management. It can show the current situation and let the stakeholders decide the
right mitigation plan.
Internet of Things offers much more benefits for a company to increase its supply chain
performances. The rapid inbound of demands for a product requires the system to perform at a
fast pace. It can be achieved by implementing the Internet of things to the supply chain system.
When the order comes, the related department can inform directly in no time to the
manufacturing department and at the same time to the procurement department. By cutting
the time required to share the detail information, the decision-makers can decide and execute
the process faster. For some big companies, the implementation of the Internet of Things has
stepped to the next level. Within their manufacturing facilities, the workers are equipped with
advanced devices to help in increasing the performances such as the usage of smart glasses to
reduce the time for checking the product.
The implementation of the Internet of Things would be the most challenging phases that a
company will face. It is not just as simple as changing the habits of using a typewriter to a
laptop. When deciding to makes the Internet of Things be part of the system, some device
instalment and working method should be done. This requires the stakeholder to plan carefully,
so the consequences would be minimized. It is difficult to determine which technology that can
effectively support a process and for how long it is until other sophisticated technology released
[ CITATION Zar17 \l 1033 ] . These kinds of insecurity should be considered as the factors in the
implementation. It would be bad for the company when they just install a device for a week and
another up-to-date version is released in the next week with more feature and less technical
issue. Then, the changing system and instalment of new devices mean the disaster for the
financial department. More budget will be spent to but the devices, supportive tools, installing
the software, recruiting the experts and conducting the training. Moreover, when the
implementation has taken place, the company should spare some budget for maintenance.
It is obvious when adjusting the technologies to the system will require new skills. Peoples
within the system should understand the operation method, the features and the importance
of the technologies. It creates the skill and knowledge gap that makes the technologies
susceptible to be used until its potential performance. The company needs to conduct some
intensive training to fulfil the skill and knowledge gap. It is not that easy to force people to
understand new things in short of time, so the company at the same time have to find skilled
people who understand the IoT well to ensure the system will run well.
As it is explained above, the Internet of Things will produce such amount of data that need
to be stored and processed. Then, the data storage becomes another issue as there will be a
capacity that a device or system had to store the data. The company should be able to manage
the data well for which one should be stored and how long it is. Data management is very
important to accommodate the storage issue and filtering the data to be used.
Then, the issues of the Internet of Things is a security system. In the interconnected system
that using the internet as the media to transfer or process any data, there would be a possibility
to have a cyber-physical attack by other parties outside of the system. The lack of investigation
over the supplier or vendors that participate in the business often becomes the source of the
risk[ CITATION Far19 \l 1033 ]. Also, a bad security system may ruin the business process. The
criminality action like stealing or corrupting the data might occur anytime. Similar to the
security system, the Internet of Things also gives the user a challenge in the privacy of peoples.
A company that runs in the service sectors like health care will record any personal information
of its customer. Commonly, they will collect the detail of personal information such as name,
address, and date of birth. It transmits within the system without the encryption which
increases the rate of privacy risk [ CITATION Sub15 \l 1033 ].
As mentioned above, the implementation of the Internet of Things in Supply Chain offers
many challenges. However, those challenges might be overcome through careful strategic
planning and analysis. The benefits that are given by it to the supply chain performance and the
business itself also can help the company sustain the global competition which requires fast
handling and innovation. When the Internet of Things has been implemented to one process in
Supply Chain Management, the other part will follow by itself. The efficiency of the system will
be created if all parts in supply chain management have covered by the Internet of Things.
Those ideas of the implementation of the Internet of Things in Supply Chain have been
proven by some of the global-scale companies. Through the system of Prime Now which is part
of the Amazon service product. This system offers to the consumer with the assurance of 1-
hour delivery over the product that they purchased through the online system [ CITATION Ama18
\l 1033 ]. Without the effective implementation of the internet of things in their supply chain
system, Amazon will not be able to have this kind of product service. A company like DHL which
runs in logistics sectors is another example of the important role of the Internet of Things to
increase the Supply Chain performances. Through the advanced supply chain system they had,
DHL can cover the whole world demand. The warehouse management system owned by DHL is
the key to their success. They have a system that allows for piece picking rather than big batch
which allows e-commerce needed to be fulfilled. Besides, the sophisticated robots, augmented
reality and automation supports the system well. The internet of Things plays its role hear to
ensure the system will not facing the bottleneck [ CITATION Ban18 \l 1033 ].
By the examples above it look like only a big company that can implement the Internet of
Things to their supply chain system but does not rule out the possibility that a small company
can also do it. The simpler Internet of Things system may be used for that kind of company. The
usage of the cloud-storage system is one of them. Some technology-based company like Google
and Microsoft has to provide the software to support it. Google with their google drive, mail
and google meeting are the examples of products. For Microsoft, they have Microsoft 365
which already covers every core office software.
The Internet of Things has been part of human life since a new millennium comes. Every
sector of industry from food and beverages to the entertainment has relays on the Internet of
Things to run their business. It is also proven by a dozen of new companies that based on
internet and technology established only in a few years. Since that, technology has rapidly
developed. Those companies are not only competing to sustain and save their business but also
invent new technology as their product. The invention seems like an ordinary thing In today’s
era. Even not all of the company has implemented the Internet of Things for their supply chain,
but it is surely only in the few years ahead our world will reach that state where everything is
relay on the internet without any exception.
To sum up, supply chain management which is the core of a company can be developed
more. The solution to increasing its potential to the maximum length is using the Internet of
Things. It can transform the system to the whole new level with the technology as based. The
idea in the Internet of Things for Supply Chain management is to help in the information and
knowledge sharing. It will make a process faster and cut the time required. Internet of Things
also will help the stakeholders for doing a decision making. The data that flow among the
integrated system through the internet ensure the analysis process would be more accurate
and faster, so the issues about the decision can be minimized. However, many challenges must
be faced by a company whenever they decide to implement the Internet of Things for their
supply chain. Implementation means changing the whole system they had. The company should
prepare for the financial shock to buy subscribing the devices, plan for intensive training that
involves whole officers and the maintenance which also covers the security and privacy system.

References
Amazon. (2018, Mar 7). Everything You Need to Know About Prime Now. Retrieved from amazon.com:
https://www.amazon.com/primeinsider/tips/prime-now-qa.html
Atluri, V., Eaton, J., Kamat, M., Rao, S., & Sahni, S. (2018, November). Tech-Enabled Disruption of
Products and Services: The New Battleground for Industrial Companies. Retrieved from
McKinsey: https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/tech-
enabled-disruption-of-products-and-services
Banker, S. (2014). Warehouse Control in the Age of the Internet of Things. Supply Chain Management
Review, 26-29.
Banker, S. (2018, Dec 3). DHL Supply Chain Invests $300M In Emerging Technologies. Retrieved from
Forbes: https://www.forbes.com/sites/stevebanker/2018/12/03/dhl-supply-chain-invests-
350m-in-emerging-technologies/#2425ee9f71a8
Ben-Daya, M., Hassini, E., & Bahroun, Z. (2019). Internet of Things and Supply Chain Management: A
Literature Review. International Journal of Production Research, 15-16.
Christopher, M. (2016). Logistics & Supply Chain Management. Harlow: Pearson.
Farooq, M. J., & Zhu, Q. (2019). IoT Supply Chain Security: Overview, Challenges, and the Road Ahead.
ArXiv, abs/1908.07828.
Lambert, D., & Cooper, M. (2000). Issues in Supply Chain Management. Industrial Marketing
Management, 65-83.
Li, B., & Li, Y. (2017). Internet of Things Drives Supply Chain Innovation: A Research Framework.
International Journal of Organizational Innovation, 71-92.
Ross, D. F. (2016). Introduction to Supply Chain Management Technologies. Boca Raton, FL: St. Lucie
Press.
Subramanian, S., Gopal, V. V., & Muthusamy, M. (2015). Security and Privacy Challenges of IoT-enabled
Solutions. ISACA Journal.
World Economic Forum. (2017). Impact of the Fourth Industrial Revolution on Supply Chains. Geneva:
World Economic Forum.
Zarpelao, B., Miani, R. S., Kawakani, C., & Alvarenga, S. (2017). A Survey of Intrusion Detection in
Internet of Things. Journal of Network and Computer Applications, 25-37.