The Internet of Things (IoT) – Say hello to the digital supply chain!

In the last 5 years there has been an explosion of smart and connected devices. Gartner predicts that by 2020 there will be 37 billion connected devices and more than 4.3 zetabytes of data generated by those devices. The Internet of Things (IoT) is on the rise!

The rapid adoption of health devices like Fitbit and smart thermostats like Nest are bringing more connections and opportunities to the consumer world. As a result, many home appliance and consumer goods manufacturers are looking for ways to capitalize on this trend and transform the way they interact with their consumers and customers.

To understand how this is starting to evolve and how it will impact and transform the digital supply chain, let’s look at 4 use cases emerging among early adopters in this space.

Registration and warranty management

The basic requirement for the management of smart devices is the registration of this device and its identification as a valid and unique item. In the past, in the consumer space, this was a process associated with warranty management. This task was made possible with warranty registration cards bundled with home appliance instructions.

This gave manufacturers some limited insight into their consumers and gave consumers some level of reassurance in the event of a problem with the device. According to Warranty Weekly magazine, the best-in-class participation in this paper-based process was 2%. This means that 98% of consumers were largely unknown to a business and, in the event of a failure, these consumers would often look for receipts and proof of purchase to prove warranty claims.

In the age of IoT, smart devices can register themselves and integrate with e-commerce information to connect individual devices with consumers. Supporting this often requires investment in warehousing and order management capabilities to support item-level serialization and integrating this information into a highly scalable IoT services and entitlement management system.

Consequently, when the device is first detected and connected (via WiFi or Bluetooth), it is able to “call home”. This actively declares itself and registers for the guarantee claim by comparing it with the e-commerce details (name, address, e-mail, etc.).

Not only does this give the consumer peace of mind that their device is registered and covered by warranty should that be required, but it also has major benefits for the manufacturer.

Registration rates should approach 100%, allowing for improved marketing database and consumer insights. The expensive infrastructure of mail processing and data entry (including the inevitable entry errors) is no longer needed, and the foundation for other higher-value IoT-driven processes is laid.

Intelligent replenishment

For smart devices that require consumables, one area of ​​significant interest is to enable consumption-based replenishment. By tracking consumption events on the device and tracking or modeling a consumer’s inventory, automatic replenishment can be triggered to ensure the user never runs out of stock.

Unlike time-based subscription services, this adjusts top-up based on actual usage and usage rates. This avoids bottlenecks when the consumption rate increases, or excessive inventories when it slows down.

By offering this direct service, the manufacturer not only “locks” the consumer in to their brand(s), they also have the opportunity to take charge of the replenishment process themselves and retain the margins normally associated with a retailer or would be passed on to distributors. The consumer has a hands-free replenishment process and can be sure that they will not run out of scheduled deliveries or have to cancel them.

In addition to these benefits, with the right IoT infrastructure, a manufacturer is able to generate real-time data at the individual device level and gain detailed insights into consumer-to-consumer usage patterns, including inventory levels and how that can impact. Dissemination of data showing consumption demographics by region will be every marketing department’s dream.

From a marketing and new product development perspective, the data and potential insights are tremendously valuable. However, this also results in significant benefits for the supply chain. Comparing how much the pursuit of point-of-sale and retail inventory data was of great benefit in improving forecasting and deployment decisions 10 years ago, the IoT offers the opportunity to have true end-to-end visibility of inventory and of use from production to consumption.

Proactive service

In both the B2B and B2C space, the IoT offers the opportunity for service improvements and a level of proactivity that can be a key differentiator with your customers. With sensors built into devices, the IoT can collect these telemetry and key events on a device and enable their tracking and analysis to drive service activities.

Feeding this data into machine learning and predictive analytics engines can result in proactively scheduling a service call or triggering user intervention ahead of a major outage or quality issue. Additionally, by tracking devices in the field, regional differences and the impact on the device can be observed and incorporated into product design or user training. For example, how does a device like a coffee machine behave in a hard water zone compared to a soft water zone?

Predicting errors and triggering user intervention, such as A simple maintenance task or cleaning a piece of equipment, for example, can significantly reduce returns and field failures. This not only avoids the high cost of return logistics and warranty costs, but also avoids damaging your brand from a one-customer breakdown.

Everything as a service

As manufacturers expand their Internet of Things (IoT) platforms and develop better insight and access into a device’s usage, performance and activity, new business opportunities open up. A company can track usage, replenish equipment, maintain and provide more guaranteed availability to an end user.

An important opportunity is captured in the term “everything as a service”. Rather than selling devices or equipment, often for large capital investments, manufacturers can offer discrete, results-oriented services. A simple example could be “Laundry as a Service”. Instead of charging a consumer hundreds of dollars for a state-of-the-art washing machine, make the machine available for free but only charge a small fee for each use.

After a certain time or number of cycles, a “free” upgrade could be offered. A similar model exists today with mobile and telecommunications providers. Appliance makers could also work with detergent brands to build in smart replenishment and include that in the service charge as well.

For some time, major earthmoving equipment manufacturers have rented equipment on a time basis. With IoT, this can be varied based on actual usage to allow for differentiated offerings and tailored packages based on the nature of customer needs. “Bottom holes as a service”!

The Internet of Things (IoT)

The Internet of Things (IoT) and smart devices are emerging in many new categories and areas where technology previously did not exist. These use cases are specific examples for both B2B and B2C channels. They build on each other and increase visibility, services and business opportunities.

You need to understand how the Internet of Things (IoT) can transform your business and category, and move fast to take advantage of it. You can be very sure that your competition is.

Special thanks to Neil Hampshire for his contributions.

Originally published August 17, 2017.

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