On a cold, snowy day in New York City, a pharmacist stocks new cold medication with confidence that the products are not counterfeit and are safe for her consumers. On an auto manufacturing line in Stuttgart, Germany the parts for each vehicle are delivered as they are needed for production of a custom vehicle. And during a safety drill at a Canadian oil refinery, more than 200 workers are rapidly evacuated and instantly accounted for, safe and secure. These may seem like simple and unrelated situations, but they share one thing in common: in order for them to actually take place, a business must be instrumented, interconnected, and intelligent. Within an organization,
- Interconnected refers to the simple, natural, flexible connection of people, processes, and information inside and outside the organization
- Instrumented means that people and technology sense and act upon important business events
- Intelligent means that empowered people make effective decisions in real-time and dynamically adjust the business
The situations described above require information down to the item level, with full details on the life of a product from farm to fork. They demand up-to-the-minute visibility of critical resources in hazardous environments, and real-time knowledge of where components are in the supply chain. While these are all complex issues, they are not problems of the future; they are here today, and so are their solutions.
Global integration is creating the need for real-time and expansive visibility into business information and operations. The perfect storm has arrived; the world is experiencing an explosion in information, making the quest for visibility more difficult. Companies around the globe have made it a high priority to obtain better visibility into business information that in the past has been unavailable or siloed into narrow, vertical business areas. As data increases in volume and its value grows, organizations require greater interconnectivity for free information flow across the organization. Interconnectivity gives businesses the ability to grow, transform, gain competitive advantage and maintain client satisfaction through better management of information and business events.
Statistics show that 10 percent of the drugs on the worldwide market are counterfeit, $40 billion is lost each year due to inefficient supply chains, and $48 billion of food is thrown away each year due to product freshness and expiration issues. Because of these challenges, many companies have moved to sensor-based technologies, such as Radio-Frequency Identification (RFID), to uncover previously elusive data, and turn this data first into information, and then into insights that they can use to identify opportunities and potential threats to the business, and make better decisions.
In 2009, IBM conducted the Chief Supply Chain Officer Study, which polled hundreds of C-level supply chain executives to determine their key areas of concern. The study responses indicated that:
- 70 percent of executives interviewed agree that visibility significantly impacts their supply chain operations, while sixty percent say risk management is a key impediment
- 75 percent of the executives interviewed cite organizational silos and competing priorities as major barriers to increasing supply chain visibility
The good news is that as the world grows smaller and more interdependent, companies can be uniquely positioned to create new, different and much smarter supply chains. Through the use of smart objects – RFID tags, meters, actuators and sensors – information previously created by people or not available can now be largely machine generated. For supply chains, this means inventories will count themselves, shipping containers will detect their contents and pallets will self-report in if they end up in the wrong place. For people, this means the chance to do more important and strategic work.
Sensor solutions and the use of RFID are not just a passing fancy. Forrester Research predicts that cross-industry investments in technologies such as RFID and sensor-based networks will fuel what will be an $11.6 billion global market by 2012. (Global Extended Internet Forecast 2006 – 2012, Forrester Research Inc., September 2006).
Using the latest sensor technologies and the connective power of the Internet, companies can connect entire supply chains. Customers, suppliers and IT systems, as well as parts, products and other smart objects, can all be interconnected, creating worldwide networks of supply chains that plan and work together, as well as respond and adapt together as conditions change. And by harnessing analytic, modeling and simulation capabilities, companies can experiment with new supply chain models, enabling them to evaluate and test alternative scenarios against an incredibly complex assortment of risks and constraints.
Better tracking of airliner parts improves processes and removes costs
Airbus is one of the world’s largest aircraft manufacturers, producing over 50 percent of all new airliners with over 100 seats. With its suppliers becoming more geographically dispersed, Airbus is finding it is increasing difficult to track parts, components, and other assets as they move from suppliers’ warehouses to one of Airbus’ 18 manufacturing sites.
Airbus’ initial mission was to create a smart sensing solution capable of detecting when inbound shipments deviate from their intended paths. As parts move from suppliers to the assembly line, they travel in containers fitted with RFID tags that hold vital information. At each important juncture, readers interrogate these tags and alert operations if the shipments arrive at the incorrect location or do not contain the expected parts. These alerts occur before a problem impacts the production line.
“By making our value chain more transparent, we’re gaining more accuracy and control in our business processes,” said Carlo Nizam, head of Value Chain Visibility at Airbus.
Benefits of the solution include, but are not limited to:
- Reducing the incidence and severity of parts deliver errors and costs associated with error corrections
- 80 percent reduction in the number of shipment containers, eliminating significant carrying costs
- Increased overall efficiency of parts flow
This solution combines IBM services and software, including Software Group Services, Global Business Services, WebSphere® Sensor Events featuring WebSphere Business Events, WebSphere Process Server, WebSphere Business Monitor, Tivoli® Composite Application Manager for WebSphere, and Tivoli Monitoring.
New visibility keeps this business blooming with quality and speed
Container Centralen, Europe’s largest provider of reusable transport equipment and services, is using sensor solutions to allow participants in the horticulture supply chain to track the progress of shipments as they move from growers to wholesalers and retailers across 40 countries in Europe.
Over 80,000 growers, wholesalers and retailers use Container Centralen’s flower and plant trolley to deliver fresh flower and plants with speed and in the most optimum condition. In order to meet client requirements, Container Centralen must create a system to ensure that the trolleys are available when and where they are needed. With 3.5 million trolleys in the system, real-time, accurate tracking is essential.
To ensure product quality and customer satisfaction, Container Centralen is outfitting each of its flower and plant trolleys with intelligent RFID tags. The data from the RFID tags will be captured and stored by IBM’s WebSphere Sensor Events, a key component of the IBM Sensor Events platform. This will allow for unprecedented transparency and security for all partners in the supply chain. This solution is expected to provide:
- Improved speed and agility in supply chain operations
- Enhanced utilization of reusable assets and reduction of reusable asset replacement costs
- Reduced opportunity for insertion of counterfeit trolleys into the supply chain and distribution of counterfeit plants
- Increased quality guarantee that the products being delivered are the high quality that clients have come to expect
With greater instrumentation, interconnection and intelligence, companies can forge more robust supply chains that can predict, if not prevent, disruptions before they occur and that can tap into vast networks of suppliers and partners on the fly. These ‘new world’ supply chains, because of their inherent intuitiveness and flexibility, can anticipate and act on the challenges of today as well as adapt to – even capitalize on -- the challenges of tomorrow.
By Janine Browder (Cary, North Carolina). Jan is responsible for Global Marketing for IBM Sensor Solutions.
