The internet is moving from smartphones and computer screens to everyday devices like parking meters, toothbrushes, and locks. Coffeepots talk to alarm clocks to know when to start brewing, thermostats talk to motion sensors, and cell phones to know when to unlock the house. Wired predicts 1 trillion devices will be connected in the Internet of Things (IoT) by 2025. The IoT, a network of physical things accessed through the internet, is fast becoming ubiquitous as the price of technology drops. In 2010, the number of things connected to the internet exceeded the number of people on earth. By 2020, there will be 50+ billion things talking to one another, reports Cisco. We’re about to reach a new era of many-to-many communication, resulting in faster resolution, access to more knowledge, and lower costs.
Yet our supply chains are stuck in an era of one-to-one distribution. Product ships from the factory to a manufacturer’s mixing center, where retailers purchase full truckloads. The result is that most manufacturers have warehouses next to one another in large industrial parks. Think of the waste as truckloads leave, with a single layer of canned goods that weigh out the truck, minutes after a truck of paper towels that cubes out leaves from the other side of the industrial park. A truckload of cans on the bottom and paper towels on the top could have left for half of the cost. Imagine the benefits if those warehouses functioned as one: the retailer could build a truckload order across all of those products.
Other industries have figured out how to leverage regionally optimized, shared facilities. Airports service multiple airlines. Passengers flow in from one carrier and sort themselves onto another carrier for their next leg. When was the last time that you booked a flight where you needed to change airports to change planes? Airlines leverage the benefits of shared infrastructure (security, food service, fuel, air traffic control, etc.) to deliver better, faster solutions to their customers.
The result of the many-to-many model is that trucks are optimally filled due to greater variation in product size and weight. Service is faster because scale allows products to ship daily to a retailer or last-mile collection points. Costs are lower because shared services and fewer, fuller trucks save money. Road congestion, particularly important in growing, urban areas, is reduced. This is the connected, smart supply chain of the future, and it’s here today, within the ES3 network.