The Internet of Things (IoT) involves connected products, assets, fleets, infrastructures, markets, and people. In this series of blogs, we’ll address each of these connected aspects in turn.
While IoT can improve the management of fixed assets such as manufacturing equipment, it also optimizes the management of assets that are in motion — from trucks to forklifts to autonomous vehicles. We refer to this application of IoT as connected fleets.
The first connected fleets have involved automobiles. By 2021, nearly 100 million connected cars will be sold each year. For companies like GM, which already boasts a fleet of 12 million IoT-enabled cars, connected fleets can transform business models.
Connected fleets have implications for many organizations. Manufacturers of all kinds can use connected fleets to gain new visibility into their supply chains, lowering transportation costs and boosting throughput and fleet efficiency — while improving customer service through on-time delivery, for example. Logistics providers can increase revenues, identify and reduce unused capacity, and improve delivery. Heavy-equipment operators such as mining companies can manage trucks, loaders, and other expensive equipment in remote locations.
Maxing connections and advantages
To gain the maximum advantages of connected fleets, it helps to recognize the areas where IoT connectivity can deliver the most benefits. We’ve identified three key use cases:
Mobile asset insights — IoT enables organizations to capture and analyze vehicle data in real time. While that sounds straightforward, the potential benefits are manifold.
You can monitor vehicle operating parameters and performance to keep assets well-maintained and operational. You can also track vehicle location and driver behavior to make sure assets are being used in the right manner in the right context. For example, usage patterns for acceleration, braking, idle time, and fuel consumption could reflect undesirable driver behavior.
Geofencing capabilities allow fleet management to restrict, warn, or log usage of assets. Simply by adding sensors to a truck trailer, you can track container capacity and cargo conditions such as vibration and temperature.
Current telematics data enables real-time route planning for outbound logistics, with the ability to respond to changing conditions such as traffic. It can also help you improve efficiency to accommodate priority or incoming orders for share-load logistics. Historical telematics data enables operational improvements to fleet management in warehouses and on the shop floor.
Logistics safety — IoT allows organizations to improve the safety of assets, hazardous goods, and people. Equipment sensors can make sure assets function only in safe locations and operating parameters. They can also monitor hazardous goods and conditions. Wearable technology can ensure the safety of people in both routine and extreme situations.
This functionality can help organizations save tremendous amounts of money by avoiding equipment malfunctions and accidents. It can also save lives. In the event of an accident or safety situation, IoT can aid recovery efforts, informing rescuers and keeping them out of harm’s way.
Logistics networks — IoT allows organizations to optimize supply chain logistics and regulatory compliance across their global networks. This can be especially useful for organizations like hubs and port authorities. How can they continually increase throughput without growing physical capacity? By running fleets more efficiently.
Track-and-trace capabilities let you understand how many orders will enter a port, for example. A network logistics hub allows you to orchestrate the right number of containers, cranes, trains, trucks, and other equipment at the right time. And because the data is real-time, you can quickly adjust to changing conditions such as weather. Track and trace also improves regulatory compliance — for example, by allowing you to avoid packing or storing incompatible hazardous materials.
New connections, new models
In all these situations, organizations gain opportunities for new competitive advantage.
Manufacturers can increase revenue by combining products with services. For example, a forklift manufacturer worked with SAP to reimagine its business. The company had saturated the market for high-end forklifts. But IoT technology is enabling the company to lease forklifts and charge based on usage. By using sensors and connectivity to closely track how forklifts are being used — the number or weight of loads handled, for example — the company can lease its products to companies of all sizes, which pay only for the services they actually use. Customers don’t need to make large capital investments, and the manufacturer gains a new, ongoing revenue stream from both existing and new customers.
Service providers such as insurers offering pay-per-use models can leverage asset usage and location data to determine risk. The insurer benefits by getting deeper insight into the asset, its purpose, and location. Customers benefit from potentially lower premiums or a pay-per-use cost model.
Logistics providers can increase revenue by offering unused capacity to a logistics business network. Matching capabilities could create a marketplace to match demand and supply for shippers and carriers. Airports can improve operations, including parking, security, catering, fueling, cleaning, and fleet management such as real-time airplane tracking.
The efficiencies of connected fleets often pay off in lower costs and better customer experiences. The key is to go beyond simple gathering of IoT data. Organizations will need to combine sensor data with contextual and business data, and then analyze it to gain insights and make predictions. It’s at this informational intersection that connected fleets will truly deliver value.
Effective IoT connectedness requires a unifying foundation. SAP has addressed this need by introducing the SAP Leonardo portfolio, an innovative IoT solution portfolio designed to help organizations digitally transform existing processes and evolve to new digital models. Learn more by downloading an SAP Leonardo brochure, reading about real-world use cases, visiting sap.com/iot, attending our flagship event Leonardo Live this summer, and following us on Twitter at @SAPLeonardo.