Internet of Things in Logistics – An Interview with Franz Hero from SAP

The Internet of Things will transform the way we do business. Full transparency and the connection of everything are going to have a huge impact on our lives. Especially the logistic branch can make big improvements with help of these new technologies. We interviewed Franz Hero, responsible for Supply Chain and Logistics development at SAP, on IoT in Supply Chain Management.

How is IoT used in logistics?

Franz Hero - Photo: SAP

Franz Hero – Photo: SAP

Franz Hero: Logistics, transportation and warehousing are traditionally among the first movers in the space of connected devices which can sense and ‘communicate’, long before the term ‘IoT’ even was coined. Advanced communication systems embedded with RFID and sensors, powered by IoT help companies move up the value chain. The degree of innovation and disruption the Internet of Things brings to logistics is only starting to become visible. But we can already see how IoT leads to full transparency on assets and products during production and in use.

To give you an example: with our SAP Global Track and Trace solution with real time information on geographic location, temperature and vibration from our sensors, we are giving our customers new insights which can transform modern delivery models for our customers.

How will IoT revolutionize Supply Chain Management?

Franz Hero: Technical innovations are at the heart of the IoT revolution which enable us to realize ideas that have been around for years. Now as things become digitally accessible at any point in time along the supply chain, they connect to the digital backbones of enterprises without the manual interaction of paper or people. Big data and machine learning empowered by in-memory cloud and edge computing are able to identify patterns and trends, predict future behaviors and optimize the business in real time. IT & OT will converge and become one over time.

Where are the opportunities?

Franz Hero: Beyond mere operation efficiency, the flexibilization of production processes due to full transparency on asset availability will allow to accommodate the increasing demand of personalization of goods. Mass customization responding to fast changing demand signals will become the norm. Dynamics and availability of goods along the supply chain will dramatically increase, as the position of goods will become fully transparent. In the case of finished goods, distributed warehouses integrating merchandise in stores will generate a new level of product availability for customers and shorten delivery times. Goods will be finished further down in the logistics chain and personalized while the consumer makes his buying decision.

What are examples of how IoT can help transform logistics or how it is already changing it?

Franz Hero: There are several startups collaborating with the SAP IoT Startup Accelerator that already start to transform logistics of SAP customers. One of them is InstaFreight, a B2B digital forwarding company that works as a one-stop shop for road freight. They target commercial customers and offer them a click & buy experience with instant pricing and allow for a fast and convenient booking experience online.

What are your recommendations for a logistics company applying IoT?

Franz Hero: The Internet of Things allows companies to go way beyond operational efficiency, but rethink entire business models and shift industry boundaries toward an outcome base economy. So I would recommend the companies applying IoT to open their minds towards these new opportunities and prepared to see their supply chains evolve into new networks of production and logistics.

Get Started IoT Network #6 at SAP IoT Startup Accelerator, January 16, 2018, 9-10.30 a.m.

More information on our IoT Network here.