Investment in interconnected “smart” devices is set to rise, a new report exploring the Internet of Things (IoT) suggests. Indeed, the new research from food and grocery research charity IGD shows that 37% of food and grocery companies are already trialling or have successfully deployed IoT products or services, with a further 58% planning to increase their use of technology providers to help them embrace IoT opportunities.
From smart fridges to smart heating systems, IoT technology changes the way business collect data and make predictions with real-time consumer demand and product sensors providing live feedback.
IGD’s research, exploring the evolution of the IoT opportunity and the strategic implications for food and grocery supply chains, questioned 84 food and grocery businesses and service providers worldwide. Some 61% highlighted “improved understanding of customers” in their top three expected business benefits of IoT, with 53% of companies citing “reduced costs and increased efficiencies” and 51% “development of new business models”.
Assessing how IoT will create greater connectivity through data transparency and business partnerships, change the way businesses operate and reinvent value through the creation of new services and applications, Chris Irish, Supply chain insight manager at IGD, discusses nine predictions IGD is making about its evolution:
“The pace of change and breadth of impact for technology is such that demand is growing for food and grocery supply chains to deliver innovations that offer speed, transparency, connectivity and convenience. The Internet of Things allows each unique product to be tracked and monitored, opening up the possibility for highly personalised and responsive solutions for consumers while introducing a new level of real time data-sharing for businesses.”
1. IoT will increase opportunities for product and service personalisation, and help fuel growing expectations in this area. Greater personalisation could boost sales but does present supply chains with challenges around fragmentation and lower economies of scale.
2. IoT will even up supply chains by increasing visibility, and this means companies will collaborate more as opportunities surface. IoT holds the potential for breaking down the information silos by creating connections and transparency throughout the end-to-end chain.
3. Companies will increasingly turn to service providers with expertise in technology and analytics to help them realise the opportunity. Using providers can reduce capital investment, pool expertise, keep businesses agile, and foster competition and innovation in the market.
4. Privacy concerns with sharing personal data won’t be a major barrier as people have become accustomed to sharing this, provided they see the benefits. The internet and social media have already set a precedent that provides lessons for IoT – companies must convince users they are trustworthy, with the security of their data as well as in their intentions with it.
5. Forecasting will be constructed from individual consumer demand by responding to and shaping real-time events with direct visibility of impact. IoT will radically change the traditional business approach to forecasting by bringing businesses more accurate data to work with from live consumer feedback using product sensors.
6. New business models will become dominant, based around services, subscriptions and crowd sourcing, accelerating radical restructuring in the industry. IoT helps catalyse this shift, acting as a foothold to services created by the production of new connections, consumer-level visibility and personalised engagement.
7. Consumers won’t directly pay more for existing products to be Internet of Things enabled – technology companies and retailers will need to find other ways to create value for themselves from the data generated. Creating value will lie in offering customers additional services around their product while demonstrating the internal efficiencies delivered through the insight generated.
8. IoT will accelerate automation and AI, driving efficiencies and changing the capabilities and resource needed in supply chains but risking an increase in vulnerability to system failures or hacking. IoT provides the “eyes and ears” for many other transformational technologies that will be able to leverage the wealth of information automatically acquired.
9. There won’t be a “game-changing” IoT innovation, but an accumulation of applications will steadily increase take-up until its ubiquity results in transformational change. The more enabled devices there are in the market, the more increasingly powerful IoT will become. Standards or interfaces will be crucial to promote collaboration and prevent companies being “locked” into distinct IoT eco-systems.
“A new age of retailing is emerging – a digital, connected and personalised age, shaped by technology and the consumer. An IoT-enabled food and grocery supply chain helps bring this about through live, precise, consumer and product level insight enabling efficient, responsive solutions that meet needs and create value throughout the chain,” Chris Irish concludes.