Manufacturers have always envisioned a fully connected supply chain. And as supply chains grow increasingly extended and complex, connectivity has never been more important. Enter machine-to-machine (M2M) technology. The fabric that connects the Internet of Things (IoT) is also a critical tool that makes the fully connected supply chain a reality. Experts say that M2M supply-chain connectivity has the ability to transform supply-chain planning and execution and create business opportunities for manufacturers where none existed before.
"M2M takes the planning vision and puts it into a real-time view of what's going on," said John Harrington, product manager for manufacturing solutions at Kepware Technologies in Portland, Maine.
Traditionally, the supply chain was driven based on the ERP system -- a best guess at consumption and production, he said. "But you don't want to look at what is planned on being built and consumed; you want to look at what is actually being built and consumed."
M2M technologies such as radio frequency identification (RFID) tags, ZigBee sensors, global positioning system (GPS) chips and smart cards capture data on the identity, status or condition of physical assets and make that data available to other software products, hardware products or devices with which either people or automated systems can interact.
"With M2M technology, you can look across the supply chain and see critical control points," said Robert Giacobbe, managing director at Dublin, Ireland-based management consulting firm Accenture. Manufacturers can easily see when and where a shipment should arrive and confirm that it arrived there, he explained. They can also know when products roll off an assembly line, a supplier releases a shipment or when a truck rolls past a transportation point.
M2M supply-chain connectivity improves data analytics
Manufacturers have been able to monitor assets for years now, said Giacobbe, and programmable Logic Controllers (PLC) and wireless connectivity aren't new. However, now manufacturers can perform predictive analytics against the data, or execute a condition-based monitoring action against it, he said.
These new analytics capabilities let the manufacturer concentrate on "the critical few," Giacobbe added. "If I'm Proctor & Gamble or Walmart, I've got tens of millions of transactions every week. The framework allows them to pull out the ones that are critical."
In this way, M2M allows manufacturers to increase production and reduce costs by monitoring machinery for not only how much it's producing, but also for certain predictors of mechanical failure like vibration, temperature and pressure, he added.
"If you have really expensive equipment and its down just for a day, you're losing tens of thousands of dollars," said Jennifer Kent, senior analyst at Parks Associates, a market research and consulting firm based in Dallas. "But if you can get an alert that tells you something is about to go wrong, you can dispatch somebody to intervene and potentially save real money."
This kind of predictability in the plant allows manufacturers to hold very little outbound inventory in the supply chain, which can greatly reduce costs, Giacobbe added.
"Now you don't need that extra inventory because you can accurately count and measure everything that's being consumed. This allows you to respond to predicted shortages quicker, and it makes you generally much more efficient," Harrington said.
Manufacturer automates product service with M2M
Take Sealed Air Corporation, a manufacturer of protective packaging materials such as Bubble Wrap, Cryovac, and Instapak. The company teamed up with Axeda, a Foxboro, Mass.-based provider of cloud-based services and software, to monitor its machinery remotely, helping to ensure optimum efficiency and avoid unnecessary downtime.
The Elmwood Park, N.J.-based manufacturer provides its machinery and materials on-site at customer's facilities.
"We can make sure our product lines are performing the way they're supposed to and understand what's happening if things go wrong," said Robert Herrmann, the remote solutions manager at Sealed Air. "These factories run basically 24/7, and the packaging equipment is critical to their operations. If a piece of equipment there is having an issue, it can have a significant effect on our customers throughput, operating costs and overall value."
Thanks to M2M supply-chain capabilities, the customer can be notified with instantaneous automatic email, alerting them that the equipment is faltering or being used improperly. A technical service rep can also be automatically notified and begin troubleshooting the issue en route to the plant.
"This time savings is critical," Herrmann noted. "An hour of downtime is measured in the tens of thousands of dollars."
Right now, Sealed Air's main objective is to make sure their customers' supply chains run smoothly, but Herrmann expects soon to use M2M technology to begin taking feedback from his equipment and loop it back into his existing systems so to generate better demand information. "If a customer calls up and says, 'We need an order of X,Y or Z,' we can say, 'Yeah, we've already started producing it,'" Herrmann added.
M2M supply-chain connectivity makes business smarter, faster
The benefits of M2M can extend all the way through the supply chain, said Kent. "M2M has the ability to fundamentally change the relationship between the manufacturer and the consumer," she said. "Manufacturers should have a plan for M2M not only to increase productivity or gain insight into their own manufacturing processes, but also to reveal new business opportunities."
A manufacturer of M2M-enabled refrigerators, for example, can monitor the health of the appliance and know when it's near the end of its lifecycle and be prepared to offer the consumer a new product. "If a manufacturer has this insight, it may be able to circumvent the retailer and sell directly to the consumer for the first time ever," Kent said. "All of the sudden, the manufacturer has a much more powerful place in the supply-chain ecosystem."
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None of this is possible, however, without smart planning and implementation, Giacobbe warned.
First, if a manufacturer doesn't have mature inventory management capabilities in place and simply plugs in M2M data -- late shipment, disabled machinery or increased order size -- they're not going to be able to act on that data.
The manufacturer also has to realize that, while building a case for M2M, "the technical case is essential, but the business case is also critical," he said. "If you're going to put in a solution which ties in your management systems into a central place, then the organization is going to have to change."
Managers need to be prepared to transform processes, create new roles and break down the silos between departments, he added. "The company has to realize that when they go down that path, by definition it's a new way of running the business. Otherwise, you might as well just not do it."
But as Herrmann pointed out, M2M supply-chain connectivity can have a "significant effect on a manufacturers' throughput, operating costs and an almost immeasurable effect on the company's overall value.
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