With many preconceptions around the introduction of Internet of Things technology being too expensive or too risky for large-scale deployment across the supply chain, it’s time to re-visit the business case. Article by Loic Barancourt, CEO and Co-Founder of Thinxtra.
As technological innovation advances, it is common for prices to drop and products to improve and the Internet of Things (IoT) has followed this common trend.
With much cheaper and simpler options on the market, it’s time to revisit your business case for investing in this technology.
To truly understand how a business case stacks up for a large scale IoT deployment for many thousands of connected assets or goods, it’s important to be clear about the value you will get by introducing this technology and at the same time be clear about the cost of deploying and maintaining it.
Firstly, the value you get from turning data into insights need to be quantified to make a concrete business case for investing.
To help companies start on their IoT journey, we usually ask a couple of simple questions.
We start with: “If you could ask your assets where they are, and how they are doing, more often, how would you do things differently?”
From here, the discussion begins to discover which operational business problems will be solved through better, informed decisions. Maybe you can move your entire supply chain faster, maybe you can make sure your customers send your assets back to you in a more timely and accurate way and reduce your loss ratios Maybe if you have the right number of containers in the production facility every morning, you can reduce downtime. There are many possibilities depending on the nature of your business.
We have these conversations with our customers to ask: how much is this worth to you?
The discussion around tracking assets in the supply chain is not just about the cost of losing assets, that is one factor. But the real benefit and value comes when you can make sure that you run more effectively and efficiently. That could be ensuring your production line never stops or providing better value for your customers – there are many ways to add value beyond asset loss reduction. We see again and again that the benefits reach across cost reduction and more robust risk management all the way to the creation of better, differentiated customer experience.
Working out your budget
Once you have an understanding of what the value of asking your assets where they are and how they are doing a couple of times a day, then you can work out what that is really worth to your business.
From here, you have a quantifiable number that you can break down into a budget. You know the value you will get from investing in IoT so it’s much easier to make the business case.
Once you have your budget, you can look at the different IoT options in that budget. This is a crucial point, as we need to add to financial viability the question of operational scalability. The technology choices and solution design need to fit the business case. Not the other way round.
This means we need to shift our thinking away from cost prohibitive high data volume. Once you look into small data options, such as the 0G network, the business case really starts to add up
If you can tap into data that lets you know where your assets are and in what condition, in regular intervals or based on certain events , ou can start to track and monitor high volumes of low-value assets across the supply chain.
We have seen this with some of our customers. Loscam, a world-leading pallet pooling and returnable packaging solution provider had explored IoT solutions for a number of years. They had tried to make tracking their assets work with 3G and 4G networks, but they couldn’t make the business case stack up
Now, with Thinxtra’s low-cost public 0G Network, they have a strong business case for tracking their lower value assets and are reaping the benefits across their entire supply chain.
Value beyond the supply chain
Like Loscam, many businesses see benefits across the entire supply chain when they invest in IoT. The value of IoT solutions are also not just found in the supply chain.
This kind of technological investment should never be assessed in isolation, it’s important to look at the value that will be generated not only across the business but also across all supply chain partners This too ensures that the business case stacks up.
If you can improve the customer experience, then sales and marketing departments also become invested in the success of the project. If the value created is far reaching across your business and customer experience, then the conversation shifts to broader benefits versus – which is when your business case really starts to fly.
One of our customers Kegstar , a stainless steel keg rental business, part of Brambles, obtains not only exact real-time location or every keg but also information of what’s inside.
Once you have a differentiator that sets you apart from all your competitors, you can even look to charge a premium for your services, win more market share and ensure that your customers continue to do business with you.
The business case becomes common sense when you calculate the value you will get from knowing every day where your assets are and in what condition they are, and can deploy an operationally scalable solution at the right cost of data production From here, you need to ask yourself: do you want to differentiate from your competitors and provide a premium service to your customers? If you do, it’s time to explore IoT.