Oct 07, 2018It's no surprise the Internet of Things (IoT) will dominate fulfillment through the next decade. A McKinsey & Co. report found IoT technology could have an $11.1 trillion economic impact by 2025—a number, McKinsey notes, that would total approximately 11 percent of the world's economy.
But despite the IoT practices already in place and the numerous use cases currently in development, questions linger about the IoT's costs and capabilities. As IoT-enabled technology fundamentally changes pick, pack and ship processes in warehouses, concerns will inevitably rise around employee privacy and data security. Addressing them now will save warehouse managers headaches later. Let's look at some of the challenges facing the IoT in the warehouse—and what steps businesses should take to solve them:
Cost vs. Value: The Sensor Dilemma
The IoT has found different levels of success in various industries. In manufacturing, sensors designed to measure machine performance are now cheap investments that pay off quickly. But in warehousing, IoT-enabled tech faces an uphill climb. Important fulfillment innovations, such as RFID tags and Bluetooth Low Energy (BLE) beacons, could simplify inventory management and help retailers avoid loss, but some warehouse managers still have concerns.
One considerable challenge: cost vs. value. Retailers have tried to implement RFID for more than a decade, but supply chain professionals are still concerned about the lopsided responsibility of implementation. Warehouses are often expected to cover the expenses related to tags, tagging equipment and software, without sales profit to offset the investment. Because RFID tagging is not yet an industry-wide compliance issue, warehouses can still weigh their options, and some aren't sure they see strong enough benefits to justify the upgrade.
One alternative to RFID tags are Bluetooth beacons, which can offer greater range and more speed than RFID tags, allow for real-time location tracking and can monitor environmental conditions, such as light and temperature for sensitive goods. Beacons can also be used to automate access controls, leading to improved processes, increased safety and theft prevention. Warehouses can deploy this technology in one zone and scale as needed. While the cost of a beacon is comparable to RFID tags, RFID calls for a greater investment on the reader infrastructure, whereas almost all smartphones can act as a reader for beacons.
Ultimately, be it RFID or beacons, warehouse managers must choose between spending more money to stay in the game or forfeiting growth opportunities with larger brick-and-mortar retailers.
Simplifying Tasks—or Enabling Micromanagement?
In today's warehouse, efficiency is king: managers look for new ways to cut costs, streamline processes and move product to customers more quickly. There's a significant market for technology that lets us fine-tune processes down to the smallest detail, and that's why Amazon's patent for warehouse wearables garnered so much buzz—and considerable controversy.
Amazon's supporters cite the technology's potential benefits: location tracking to guide employees to the correct stock-keeping unit (SKU) and movement monitoring that can help combat repetitive stress. Wearables also allow workers to have both hands free to better focus on their tasks, potentially decreasing safety incidents. However, detractors are concerned about a potential invasion of privacy. Employees don't want to feel as if they're under surveillance, especially if the information being collected can be used against them.
Although wearables are still in the development phase, they could become everyday tech if Amazon successfully implements them—and if other major companies can convince employees to buy in.
Addressing Vulnerabilities Today—Not Tomorrow
As stories of cyberattacks and data breaches splash across the front page, and as consumers express concern around how companies protect their sensitive data, warehouses need to ensure that their IoT-enabled devices are safe from hackers.
The good news: IoT experts are making progress toward fixing device vulnerabilities. Gartner estimates IoT security spending will reach $3.1 billion by 2021. The bad news: the more connected devices you operate, the more avenues there are through which cybercriminals can access those devices and customer information. Since regulations and compliance are still in the early stages of development, IT shoulders the responsibility of determining whether the warehouse's security measures are strong enough. It only takes one weak link to enable a cyber-nightmare.
Communication Is Key
Each of the above concerns is valid—the IoT, while rapidly evolving, can still be costly and vulnerable to hacks. IoT tech developers are working to fix these problems, but they must do a better job of communicating the steps they're taking to make solutions more accessible and secure for the warehouse. This means sharing IoT success stories, clearly identifying costs and benefits when speaking with warehouse managers, and being open and honest about potential vulnerabilities.
When we get the warehouse excited about IoT-enabled tech and more confident about what the future holds, we'll create avenues that drive greater innovation and deliver higher value.
Stevie Hay has worked with Aptean for 20 years in different customer-facing roles. As the general manager of Aptean's Distribution & Plant Management Group, Stevie is responsible for the strategic direction, customer satisfaction and business performance of the firm's distribution and plant management suite of products. He holds production and mechanical engineering qualifications from Napier University and worked for 10 years in electronics manufacturing before finding software.