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Internet of Things Doing Some Heavy Lifting (IoT)

The supply chain is the primary driver of the explosive expansion of M2M applications

In the last decade, the "Internet of Things" has expanded from a small set of assets with first-generation radio frequency identification (RFID) tags to a proliferation of devices using a variety of wireless machine-to-machine (M2M) technologies. By some estimates, there are as many as 10 billion M2M devices deployed worldwide today, expected to grow to a ubiquitous 30 billion by the end of this decade.[1]

The power of M2M lies in its ability to capture, transmit and analyze asset data automatically - without human intervention - and inform business decisions that increase operational efficiencies, improve service capabilities and save money.

The supply chain is the primary driver of the explosive expansion of M2M applications, accounting for as much as 40% of revenue growth in the M2M market.[2] It's no wonder: manufacturers, distributors and retailers - especially those with large-scale enterprises - have long regarded supply chain optimization as a critical competitive differentiator.

One example of an M2M technology undergoing a surge of adoption across global supply chains is a wireless Vehicle Management System (VMS) for industrial trucks, such as forklifts.

Demand Drivers for VMS
Powered industrial trucks are the heart of material handling operations in the supply chain, and the cost of owning and operating an industrial truck - including fully burdened operator labor - can exceed $250,000 per vehicle per year in a three-shift operation. For an enterprise with 500 vehicles and a typical two-shift operation, the annual budget to run the fleet can exceed $80 million.

In addition to operator labor, the major costs associated with industrial trucks include acquisition (purchase or lease); damage (to facilities and products, as well as the vehicles themselves); maintenance; energy to power the vehicles; and a variety of direct and indirect costs related to injuries caused by vehicle accidents.

Industrial trucks are also the object of extensive governmental safety regulations, detailed in Occupational Safety & Health Administration (OSHA) standard number 1910.178.

What Does a VMS Do?
A Vehicle Management System is fundamentally about controlling the use of equipment and linking all vehicle activity to the operator. With that foundation, a VMS establishes accountability for equipment use, enforces powered vehicle safety regulations, and generates asset utilization metrics that can be used as Key Performance Indicators (KPIs) for material handling.

More specifically, a VMS can improve productivity by ensuring that equipment is available to work in the proper place at the right time, tracking fleet utilization (e.g., peak vehicle usage over time), measuring operator productivity (e.g., time logged into vehicles vs. time paid, and time actively working vs. time logged in), and benchmarking best-practice KPIs for equipment usage.

A VMS also helps enforce workplace safety policies by restricting vehicle access only to trained, authorized personnel, and by requiring operators to complete an electronic safety inspection checklist prior to using equipment. In addition, a VMS typically incorporates an impact sensing system that enables management to automate responses to vehicle accidents.

VMS systems typically deliver a return on investment by: (1) reducing damage to vehicles, facilities, and goods; (2) reducing or avoiding vehicle acquisition costs by justifying decreases in fleet size; (3) optimizing fleet maintenance controls to reduce maintenance costs; (4) eliminating costs traditionally associated with monitoring and enforcing safety policies; and (5) increasing productivity and justifying a reduction or reallocation of labor.

25 Years Ago, WMS...Today, VMS
A quarter-century ago, Warehouse Management Systems (WMS) emerged in the global supply chain to help manage inventory, order processing, and shipping. Within a decade, WMS had been deployed by many forward-looking organizations. Today, if a Fortune 1000 company with material handling operations has not deployed a WMS, it is almost certainly lagging behind its competitors.

VMS for industrial trucks is in an evolutionary stage similar to where WMS was a decade ago. Many progressive and respected supply chains have deployed VMS - users include some of the world's largest auto makers, consumer packaged goods companies, food producers, government organizations, industrial manufacturers, and retailers. Looking at the pace of WMS adoption is a precedent, VMS technology can be expected to proliferate rapidly, and any organization with sizable material handling operations will be at a competitive disadvantage if it does not use VMS.

References

  1. "More Than 30 Billion Devices Will Wirelessly Connect to the Internet of Everything in 2020," ABI Research, May, 2013.
  2. "Assessing Mobile Network Operator Capabilities and Opportunities in M2M," Matthew Hatton, M2M Summit, September, 2012

More Stories By Greg Smith

Greg Smith is Vice President of Marketing and Corporate Communications at I.D. Systems, a leading provider of wireless M2M asset management solutions. He has more than 25 years of experience in technology product development, and has published dozens of articles on technology solutions in both national media and trade publications. Greg has been involved in IoT technology deployments — specifically wireless vehicle management systems (VMS) for industrial trucks — with companies such as Ford Motor Company, Nestlé, Procter & Gamble, Target, Toyota, and Wal-Mart, among others. He holds a Bachelor of Arts degree from Williams College.

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