Era of Connected Devices in the FMCG Industry

by March 28, 2016 0 comments

– Arjun Sinha Roy, VP – IoT, netCORE

Over the years, Internet of Things (IoT) has evolved to become a crucial element in people’s lives, across the globe. Gartner substantiated these claims in its recent report that anticipated the adoption of IoT in India to mature through 2020. The adoption of connected devices in the country is currently limited to sectors such as energy and utilities, oil and gas, transportation, healthcare, government and fast-moving consumer goods (FMCG).
As with every technical offering, the role of IoT always starts with the most crucial element – identifying islands of physical assets in the operational value chain. CXOs are always striving to achieve maximum efficiency in the way in which all assets function in order to drive value for the organization. Keeping this in mind, several organizations have built models for defining the value to be derived from various assets in order to maximize returns from their IoT strategy.

The FMCG sector in particular has been stricken by complexities over the years. The complexities relate to multiplicity of compliance requirements, complexity in taxation, inadequate storage and transportation infrastructure and now it is on the brink of a major revolution. Over the past decade or so, the space has been witnessing advancement with the help of technological advancements in the supply chain and the logistics space. IoT is further set to transform the FMCG sector by optimizing the production and transformation.

Arjun Sinha Roy VP – IoT, netCORE

Arjun Sinha Roy
VP – IoT, netCORE

How CXOs should pursue IoT deployments

Recent reports have highlighted the complexity of Indian quality standards across the food and dairy sector. IoT enables real time data and analytics which is the key to mitigating risks and boosting productivity across the organizational value chain. IoT implementations in the FMCG space should ideally follow a 4 step process:

1. CXOs should look at the entire organization and identify key parameters across the entire value chain which affect risk and boost productivity.

2. Once the parameters are defined, the next step is to identify the parameters in terms of data benchmarking.

3. The parameters being tracked essentially need to be measured against benchmarks which are defined as ideal in conjunction with different business and operation teams.

4. Organizations need to build basic data models in order certify compliance or identify and generate actionable points.

In the FMCG sector, procurement and the ecosystem of storage and transportation has become a crucial factor in ensuring that the production operations keep running. Many companies are making it mandatory for their contracted transporters to have GPS trackers to ensure the tracking of raw materials to the factory. In the food and dairy based companies, the quality of the raw material throughout the procurement supply cycle is crucial from the perspective of quality compliance. Increasingly we are seeing companies invest in sensor based solutions. These solutions measure parameters such as temperature, humidity, carbon dioxide or any other relevant parameter critical to the quality compliance of the raw materials. The sensors are increasingly paired with controllers which have SIMs to transfer the data to an IoT platform. Also, these companies are heavily investing in building management systems and advanced HVAC (heating, ventilating, and air conditioning) systems for factory storage. The objective would be once again to make sure that the optimal environment parameters are in place to ensure quality compliance.

Use of existing automation systems to augment IoT

Most factories have already implemented basic plant automation using PLC , a digital computer used for automation of typically industrial electromechanical processes and SCADA , a system operating with coded signals over communication channels so as to provide control of remote equipment. Organizations can integrate environment data and energy consumption with the plant automation platform. IoT enables organizations to combine analytics with the input data to improve the efficiency in plant automation.

The distribution and retail formats will also see a lot of innovation from the IoT perspective. We are already seeing organizations in the food and dairy sector actively promoting the adoption of temperature and other sensor-based IoT solutions and are trying to co-relate all the data in order to ensure that the storage facilities are seamless across Carrying and Forwarding and the distributors.

Increasingly we are also witnessing marketing and sales coming under the ambit of IoT. Sales staff are increasingly moving with hand-held terminals which can enable the organization to track the movement of feet on street, get real time data on secondary sales and drive efficiency in sales forecasting. Mobile network or GPS is increasingly being used to track the efficiency of feet on street. We are also seeing the adoption of IoT in marketing with BTL activities being tracked using mobile and GPS. Adoption of IoT in the sales and distribution process will lead to greater adoption of value added products for the FMCG industry with higher margins. Data related to storage environments will help organizations reduce loss due to wastage impacting the organizations’ bottom-line. It will drive the next round of innovation and disruption in the FMCG sector similar to the way the sector witnessed with the adoption of Internet.

The adoption of these technologies will have a huge impact in terms of product innovation. One is expected to see the movement of fresh produce increasing as the supply chain becomes modern and will come under real-time supervision and control.

IoT as mentioned is not a single technology which can be implemented in a business function. It is a framework which enables an organizational change with respect to real-time data from across the organization and from different stakeholders. IoT follows the rule of 1% in efficiency. The effort involved in implementing IoT, if done right pays off really fast. A mere 1% improvement impacts the organization’s bottom-line straight away.

In the coming years, the impact of the IoT on FMCG in the country will be significant because there are huge amounts of data that need to be tracked and managed and will affect how organizations design their business processes.

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