Why Not IoT? Series

Part 3: Why Not IoT?

More Industry Challenges

If digital business is not the future, if it’s reality and if it’s now, then it is absolutely imperative that supply chain organizations find ways to leverage IoT and other digital technologies. As we discussed last week, the consumer packaged goods industry is facing increasing challenges and pressures that could easily be alleviated with the help of digital technologies.

To add to the conversation, this week let’s discuss how various challenges and pressures are affecting other supply chains across the board.

  • Pharmaceutical: Currently, the pharmaceutical industry is approaching another patent cliff. With several patents ending, generics will wipe out about $148 billion off of Top 500 pharmaceutical revenues between 2012 and 2018[1]. With yet another revenue cliff, cost structures become even more important to maintain margins. Today’s inflexible supply chain for blockbuster drugs tolerates a heavy 25% of pharmaceutical costs[2]. About 60% or more of these costs are driven primarily by inventory and transportation costs. Keeping inauthentic product out of the supply chain and maintaining proper temperature are major risk factors contributing to that high cost.
  • Industrial: The industrial sector is struggling to find and keep the skilled people it needs, both on the shop floor and in the office. In the U.S., the unemployment rate in the sector decreased to 4.5 percent in September 2014, down from 6.9 percent in 2013, in part because of an aging workforce and younger workers shunning industrial manufacturing jobs for more glamorous sectors, such as technology. [3]
  • Chemical: The chemicals industry is facing a challenging global business environment due to the complexity surrounding heightened competition, greater instability in the price of raw materials, and varying consumer demands.[4]

Even with these challenges in mind, many industrial and B2B organizations make the mistake of believing that IoT and other digital technologies are best suited for B2C organizations. Contrarily, despite these beliefs, research conducted by PwC shows that digital technologies have already become critical differentiators in creating resilient, forward-thinking supply chains.

Thanks to increases in connected devices and advances in capabilities such as real-time monitoring, quality management, and immediate response to disruptions and risk, IoT and digital technologies afford profitable outcomes that distinguish organizations from their competitors.

Next week’s installment of “Why Not IoT?” we will discuss how IoT, sensors, and digital technologies work to yield actionable results to overcome the ever-growing lists of organizational challenges across every industry.

[1] https://www.pwc.com/jp/ja/japan-knowledge/archive/assets/pdf/pharma-2020-vision-to-decision.pdf

[2] http://www.mckinsey.com/insights/health_systems_and_services/strengthening_health_cares_supply_chain_a_five_step_plan

[3] http://www.strategyand.pwc.com/perspectives/2015-industrial-trends

[4] http://www.strategyand.pwc.com/media/file/Strategyand_Future-of-chemicals-x.pdf