December 7, 2015
In my previous post I discussed the potential benefits of the Internet of Things (IOT) within the manufacturing environment. I am now going to focus on the IOT’s specific application in waste reduction.
In recent months we have all seen numerous headlines about the high level of food waste globally. The Food and Agriculture Organisation estimated this to be 30%, or USD $1tn per year. The environmental and ethical repercussions of such wastage are daunting.
The IOT has staggering implications for reducing waste throughout the entire supply chain. From food loss (e.g. harvesting and production) to food waste (e.g. retailer and customer) resulting in gains for the environment, producers and end user costs.
As previously discussed, the IoT will provide huge quantities of data. This rich supply of information can be progressed along the entire supply chain and the link can be two-way. Demand from end users can feed back through supermarkets to manufacturers then to suppliers and even to growers who can adjust harvesting levels accordingly. Conversely if you know the exact quantity of perishable items in the entire supply chain, then smart pricing could be used to eliminate waste. When shopping in your local supermarket, you might see the automated electronic shelf pricing (linked to the supply chain stock management system) reduce the price of bananas in the afternoon because predicted demand across the region is lower than expected and local stores are overstocked.
IOT will provide benefits for waste reduction in farming. In drought-affected areas such as Australia and California, the farm manager’s laptop will know the precise moisture level at each tree or plant. He, or the connected system, can then compute the crop water requirement and match this with market prices, live reservoir water availability and forecasted rain. The result is an informed decision on precisely which crop to use scarce water resource to maximize profits. Moreover, the yield and waste attributed to a poor harvest or sub-optimal water use can be averted. Seems a long way off? I spoke to Sam Mitchell from Weathchecker, a VC company heavily invested in Australian Agriculture: ‘We are currently testing IOT devices on our farms. Water, or lack thereof, is currently one of our biggest concerns. Optimal watering and remote watering offer us advantages in this highly competitive and volatile market. The possibilities are huge.’
Farmlogs is one such data source that currently collates this information from across the globe: Which trees, farms or crops are suffering from drought goes far beyond the broad-brush weather report analysis and is more meaningful. In many areas, sophisticated irrigation often offsets any holistic weather pattern.
Vertical farming already reduces waste by creating goods closer to the market. IoT will provide more and more accurate data at greater granular level on light and nutrient requirements. MIT research suggests we are not far away from financially viable sensors being placed on individual fruits which can transmit alerts about the ripeness levels through gas analysis. This will allow growing or stage conditions to be altered or stock rotation to become more advanced than first-in-first-out. Moreover it has a huge impact on the life of a product which will in turn reduce date code related waste.
A dynamic date code could be fixed to products, taking into account any changes to storage conditions (temperature, exposure to light) and micro levels to reliably extend or reduce life. Long gone will be the days of disposing of good product which has exceeded its conservative use-by date. Food safety would also greatly benefit as shelf life could be brought forward. Logs of storage conditions would absolve manufacturers from erroneous claims. Inadvertent breaks in the cold chain could also be immediately assessed across every individual item reducing the likelihood of errors or carte blanch disposals.
Improved information about demand, be it restaurants or end users, can be used to alter growth rates by amending growing conditions.
Intricate knowledge of growing conditions will impact commodity and food markets, and in turn this could affect your own marketing department. A decision on upcoming promotions and marketing campaigns could be affected: why start to design a campaign to promote a range where highly accurate predictions of a commodity shortage will irradicate any volume-driven gains? Conversely where is there opportunity of abundance? Marketing may also latch onto end user stock data – texting you when you open your fridge, encouraging you to use up a particular product in the fridge as they can replace at a bespoke promotional price now through direct marketing to your mobile handset.
How and when will you start on this journey? Identify internal ownership now by appointing a keen champion. In-house skills in data analysis and the ability to digest and act on the concept will be vital. Similar to the computer revolution, benefits from IOT will be realized through the ability to combine the process, the organization and innovation.
It might seem daunting but IOT also offers a wealth of opportunities to allow you to be one if not three steps ahead of your competition. What are you going to do about it?
Ideas not used: Taking the concept several steps further. IOT will allow staff location data to be collated. Tracking costs by area, by line and even equipment and location will be possible. In many labour intensive businesses we have supported, the tracking of hundreds of staff and agency staff across numerous rooms and lines as product changes has always presented a challenge.
Refs: Roach & Solom, Rfdi, Mackinzie, Project Syndicate, Forbes
Written by Leon Chandler, Coriolis Consulting Pty Ltd