Global consumer markets are growing rapidly with approximately 1.8 billion people expected to join the consumer class by 2025. Along with an anticipated surge in consumer spending - the consumer sector projects a robust annual growth rate of 5 percent for the next two decades - companies are gearing up for the substantial opportunities this growth will afford. There is, however, one major obstacle that could derail an upward trajectory for businesses - their sustainability performance.
Poor sustainability performance will increasingly hamper a company's growth. The Paris Agreement, with its emphasis on reducing carbon intensity, underscores the urgency for companies to address their environmental impact. One key area for achieving breakthroughs in sustainability is the supply chain, which is responsible for over 80 percent of a company’s greenhouse gas emissions and more than 90 percent of various other environmental impacts.
Technology, and in particular Real-Time Location Systems (RTLS), can play a game-changing role in improving supply chain sustainability. RTLS, using a combination of technologies for real-time tracking and location information, offers precise, real-time insights into the movement of assets within a given area. By leveraging RTLS capabilities, companies have the potential to optimize their supply chains, reduce environmental costs, and align with sustainability goals.
Read on to discover how RTLS can be used as a powerful tool for eco-conscious supply chain management.
Challenges and Inefficiencies in Traditional Supply Chain Management
According to a recent Forbes report, 20% of every dollar spent in manufacturing is wasted, adding up to 10% of the Gross World Product (GWP) or $8 trillion. A good portion of that can be attributed to supply chain issues, particularly in cases where companies have not embraced RTLS technologies. These traditional supply chains face a number of inefficiencies, including:
Lack of Real-Time Visibility
Traditional supply chains struggle with forecasting demand accurately because information about the location and status of products is often delayed or inaccurate. This lack of real-time visibility leads to challenges in reacting quickly and efficiently to changes in demand or supply chain disruptions. Without accurate, up-to-date data, businesses are likely to either overstock certain products leading to increased waste or understock them, increasing the cost of getting them back in supply.
Suboptimal Transportation Routes
Transportation is the second-fastest-growing source of emissions globally after the power sector, producing 17% of global greenhouse gas emissions. Traditional supply chains are not able to adjust transportation routes based on real-time factors like traffic, weather, or changes in demand, creating inefficiencies in route planning and increasing fuel consumption and greenhouse gas emissions.
Manual Processes and Paperwork
Traditional supply chains use processes that are ‘manual-heavy’ - they rely on the input of people to work or move workflows along. This slows down operations and increases the likelihood of errors in critical processes such as order fulfillment and recordkeeping. In addition to creating operational bottlenecks, it leads to inefficiencies in the utilization of resources - for example, work needs to be redone or goods get returned.
Order Fulfillment Challenges
Inefficient order picking, packing, and shipping processes delay order fulfillment directly impacting the transportation phase of the supply chain. If products are not ready for shipment on time, it may lead to delays in transportation schedules, as carriers must wait for the goods to be ready for pickup. Delays often result in less efficient use of transportation resources. For example, trucks or planes may need to operate with less-than-optimal cargo loads or may need to make additional trips to meet delivery deadlines.
As we can see, the environmental consequences of inefficient supply chain practices include needing to use excessive resources such as fuel, higher energy consumption, and increased waste. On their own, small inefficiencies seem inconsequential, but added together they have a large impact on the environmental impact of the business.
RTLS technology offers a way to make incremental improvements to the use of resources and the sustainability of the business.
How RTLS Improves Sustainability
RTLS allows businesses to track the movement of assets, stock, and employees. This can be leveraged by companies to enhance the functioning of their supply chain and improve their operational efficiencies, saving resources and reducing waste. Here are some of the ways RTLS does this:
Dynamic Inventory Monitoring: RTLS provides real-time, granular data on the location and movement of inventory items allowing businesses to adjust inventory levels in response to changing demand, minimizing the risk of overstocking and reducing waste.
Real-time Route Optimization: Efficient route planning plays a crucial role in reducing carbon emissions, primarily by optimizing routes for fuel efficiency. In order to do this, companies need to use technologies like RTLS that integrate with route optimization software. This integration allows businesses to dynamically adjust transportation routes for fuel efficiency.
Efficient Order Picking: RTLS enables efficient order picking by providing real-time location data for each item in the warehouse. This minimizes the time and energy spent on searching for products, contributing to overall operational efficiency and reducing human error.
Automated Inventory Replenishment: RTLS can trigger automated inventory replenishment processes when stock levels are low, ensuring that warehouses operate at optimal capacity without excess inventory, leading to reduced energy consumption and wastage.
Smart Building Management: RTLS data can be utilized for smart building management, adjusting lighting, heating, and cooling systems based on real-time operational needs, resulting in energy-efficient warehouse operations.
Supply Chain Analytics: Integrating RTLS with supply chain analytics tools provides a comprehensive view of the entire supply chain. Businesses can identify areas with high environmental impact and implement targeted measures to reduce emissions.
Traceability and Compliance Reporting: RTLS provides a detailed record of the movement and handling of products. This traceability supports businesses in generating accurate compliance reports related to environmental regulations.
RTLS Challenges and Considerations
While RTLS is the ideal way to optimize your supply chain and reduce waste and resource usage, there are a number of challenges and factors that should be considered.
Implementation Challenges
The upfront financial investment required for implementing RTLS is substantial, encompassing costs for tags, readers, software, and network infrastructure. In addition, the integration of RTLS with existing supply chain or enterprise systems can be complex, often posing significant challenges. Legacy systems may lack compatibility with RTLS technologies, and implementation needs to be carefully planned to anticipate any of these issues. Newer solutions, such as Deeyook, that rely on existing Wi-Fi infrastructure are easier to implement as they don’t require as much of a financial investment or new infrastructure.
Privacy and Security Concerns
Employees may be wary of being continuously tracked and having their location data collected. Not only does it raise privacy concerns, but data breaches or cyber-attacks targeting the RTLS system can compromise the security of location data. The extended storage of location data can also expose individuals to prolonged privacy risks. These issues will need to be carefully negotiated and explained to employees.
Balancing Economic and Environmental Considerations
Given the initial capital outlay, businesses may have Return on Investment (ROI) concerns - they may be hesitant to commit resources, especially if the economic benefits, such as cost savings or efficiency improvements, are not immediately apparent. In addition, implementing sustainable practices may introduce complexities in the supply chain, potentially leading to trade-offs between environmental benefits and economic efficiency. Striking the right balance without compromising overall supply chain performance poses a significant challenge, as changes in one area may have cascading effects on others.
Emerging Technologies in RTLS for Supply Chain Sustainability
Technological advancements are being made all the time that will enhance the use of RTLS and expand its application in supply chain management. Some technologies to look out for include:
Blockchain Integration: The integration of blockchain technology with RTLS is gaining momentum. Blockchain ensures secure and transparent data sharing across the supply chain, reducing the risk of data tampering or manipulation.
Edge Computing for Real-time Processing: Edge computing involves processing data closer to the source (e.g., at the tag or reader), reducing latency and enhancing real-time decision-making.
AI-Driven Predictive Analytics: AI-driven predictive analytics can significantly reduce excess inventory, improve transportation efficiency, and enhance overall supply chain sustainability by aligning operations with real-time demand patterns.
5G Connectivity for Enhanced Communication: 5G connectivity can enhance the responsiveness of RTLS, enabling quicker and more accurate data transmission. This facilitates dynamic decision-making, optimizing routes and operations for greater fuel efficiency and reduced environmental impact.
IoT Sensor Fusion for Comprehensive Tracking: Integration of multiple sensors in RTLS devices, including environmental sensors, to gather comprehensive data beyond location information. This data can be leveraged to implement sustainable practices, such as optimizing energy usage in warehouses based on real-time conditions.
Deeyook: Your Partner in Sustainable Supply Chains
RTLS is a game-changing technology for businesses trying to build sustainable, environmentally friendly supply chains. By offering precise, real-time insights into asset movements, RTLS empowers companies to reduce both their operational and environmental costs.
Given how excessive resource use, energy consumption, and waste in the supply chain has been historically, the imperative for change is no longer optional - it is an essential part of future business success. The adoption of RTLS emerges not just as a technological upgrade but as a commitment to a future where sustainability and success go hand in hand.
Deeyook is your partner in making that commitment. Deeyook’s Wi-Fi-based RTLS can help transform your supply chain into a lean, efficient operation. The patented technology used by Deeyook provides the highest level of accuracy, ensuring constant knowledge of the precise location of each asset, whether indoors or outdoors, in an open space or dense environment. In addition, Deeyook integrates with all leading supply chain management systems, easily becoming part of a complete sustainable solution.