Not just supply chain's latest buzzword, the IoT has the potential to turn traditional processes inside out.
For many businesses, the Internet of Things (IoT) can seem like an abstract concept – or just a prop ripped straight from the screenplay of a big-budget science fiction flick:
"The Internet of Things is the encapsulation of the next-generation technologies that will touch nearly all facets of our day-to-day lives." – Chester Kennedy
Whether it's self-compacting garbage cans that automatically empty when full, a thermostat that "learns" what temperature you prefer and detects when you arrive home, or an artificial intelligence "personal trainer" app that monitors your health habits while providing real-time feedback, even the most simple tasks are turning "smart."
But while industry gurus, ominous studies and even Stephen Hawking predict a total tech takeover of Earth, you'll be more convinced the day Doc drives up to you in a DeLorean. At your business, you have more down-to-earth objectives to deal with on a daily basis, like turning a profit and keeping your customers satisfied.
Which is exactly why the Internet of Things is becoming more critical for business owners to understand, and act upon, than ever before.
"The Internet of Things is the encapsulation of the next-generation technologies that will touch nearly all facets of our day-to-day lives," says Chester Kennedy, CEO of the International Consortium for Advanced Manufacturing Research, based in central Florida. "The arrival of the sensor era is happening at a frenetic pace."
In other words, it's universally pervasive – and rapidly expanding. Recent Gartner research predicts that 6.4 billion connected "things" will exist in 2016, a 30 percent jump from 2015. And that's for a single year.
Here are just a few top ways the Internet of Things will affect your businesses.
1. Real-time data will revolutionize the supplier relationship.
The Internet once was the "information superhighway," capable of telling you how, what and why in a few clicks. Today, the Internet doesn't just tell you how to solve your problems – it solves them before you know there's a problem.
Gary Neights, senior director of product management for Elemica, a supply chain optimization company specializing in process industries, points to crude gasoline tanks as an example. Prior to the IoT, an employee had to physically drive to the tanks (usually miles off of long stretches of highway), check the levels, report inefficiencies, and relay the information back to the supplier to amend any issues in volume (e.g., too little gasoline or too much).
"With the Internet of Things, the physical reader, the truck and the tank feed into a connected application. That application can report real-time data, even when the tank is thousands of miles away," Neights explains. "With that data, we will know exactly when that gasoline will run out or if we are oversupplied. It's constantly filled at the optimal level."
And according to Neights, that predictably doesn't just translate to tanks and feeds. It's an entirely different way of conducting business with suppliers.
"By taking waste from overproduction out of the process, whether that's with food transport, with garbage or with gasoline, you're lowering the cost structure dramatically."
2. Universality is potentially dangerous.
As with any futuristic sci-fi story, there is always that one character (usually wearing thick-rimmed glasses and working from his basement) who predicts the tragic consequences associated with a new technology. While the Internet of Things as it relates to small businesses might not translate into cyborgs yielding machine guns, there are some definite concerns with real-time access to information.
"Data breaches and security are ongoing concerns as there are obvious adjustment issues," says Kennedy. "It's a fear of the unknown."
Neights also points out an obvious potential glitch: a loss in connectivity.
"Be it weather or some other cause, Internet connections go in and out all of the time. Let's say you're relying on data feeds and you lose connection," he says. "How will you operate? Businesses need to have a plan in place."
Neights also points to a "Big Brother" scenario as a potential downside, where suppliers or partners having constant access to your business's analytics could be problematic.
"When you're sharing your direct data with a supplier, you're divulging a great deal of other private information, as well," Neights explains. "If it's a highly powerful supplier, that doesn't benefit a small business owner."
3. The web will only continue to thicken and expand – and mostly for good.
While increasing communication among machines might seem like an intimidating notion, the IoT's immediate effect – faster problem-solving – should help to soften cause for concern.
"The Internet of Things has improved, and will continue to improve, processes," says Kennedy. "Twenty years ago, delivering a package in less than a day wasn't a guarantee. Today, we can send shipments overnight."
For retailers, maybe it's increased digital signage or cognitive computing to ensure customer delight. Or for manufacturers, it's machines working in sync, continually monitoring performance and updating pricing.
Or maybe it's how the IoT could potentially save lives.
"Say a food truck delivery driver gets lost en route to a village in a starving country," explains Neights. "That food could have fed hundreds of people. The Internet of Things will allow for better planning, less waste and better avenues for helping people."