EVIoT – A PETRAS project
EVIoT – Using IoT to improve the construction industry
The internet of things is a key initiator of the fourth industrial revolution, in part because of the impact that it can have on supply chain management. Co-ordination across the end-to-end supply chain, and data generation which allows components of the manufacturing cycle to be analysed and improved on are already making changes to many sectors.
One area that EVIOT has been focusing on is construction. The construction industry has repeatedly been criticised for low productivity levels, especially when compared to manufacturing. Several researchers have claimed that a significant reason for this low productivity is due to poor levels of supply chain integration.
They have studied and number of companies to assess the impact that IoT can have on key supply chains across industry. IoT can improve supply chain integration because of its impact on the information management process across all of the firms and components in the supply chain.
Progress so far
The EVIOT project has uncovered these barriers to supply chain integration in this scenario.
In the current supply chain, suppliers “have been asked to quote for the same thing again and again”, without having certainty of actually getting the job. This leads to distrust in the supply chain as those down the chain are expected to take the risks.
Reliance on a fragmented supply-base
With many suppliers, the chain is fragmented. The supply chain hub interviewed suggested that the overall number of suppliers should decrease.
Planning horizon and lack of regular demand
Suppliers do not have visibility of the demand – while there could potentially be a five year demand plan, in actuality it is often more likely to be between three and six months as projects get prioritised and reprioritised. As it stands, suppliers are not involved in the initial planning process. Without a disciplined supply chain business plan, there is no way to drive a longer-term forecast and stability into the chain.
Many suppliers find that clauses in their contracts are unrealistic. They then try to renegotiate the unrealistic clauses and this causes long delays, frustration, and damaged supplier trust.
In construction, the supply chain focus is on getting the contract out at the cheapest price, delaying the payment as much as possible, and repeating the process for new projects. The reason for this tendering culture is that many people are stuck in this mind-set, having managed contracts in tendering based way for their entire career. However, this obviously has an impact on supply chains as money does not flow effectively.
Misunderstanding of Supply Chain Management
“Supply Chain Management” can be seen as supply-base management. This means that each component of the chain is seen as separate and siloed, with procurement valued overflow.
Complexity of processes
With many suppliers which may have conflicting needs, the construction ecosystem is vast and complex. In addition, managing this is time consuming and challenging with lots of required paperwork and approvals.
The internet of things can radically change how supply chains are managed on every level. At the device level, RFID tags can be attached to pallets of goods, human/machine interaction can be monitored and smart devices can be used. The applications of this could be supply chain automation, a more effective documentation system, decisions can be supported with actual data, and enterprise resource planning will become much easier.
Researchers mapped the flow of information through the current supply chain in the construction businesses that they included in their research. This allowed them to pinpoint exactly where information could be captured to best benefit the firms involved, whether through material acquisition – that is – the specific materials, aggregates and specifications needed to complete a job; stock evaluation; site diaries to check the quality of goods; through to things like payments.
From their studies, the researchers on the EVIOT programme have demonstrated the value that further integration of IoT can have on the construction industry. However, barriers to the adoption include a lack of digitisation of documents, where workers often handwrite records still.
Another barrier is the planning horizon. Where businesses are only working on a three to six month plan, it can be difficult to plan and manage materials. IoT will allow companies to aggregate demand over multiple projects.
Another issue is a lack of trust. IoT has the ability to overcome this by create trustworthy information about the supply chain. IoT means that systems and information have to be integrated with each other and with legacy systems.
IoT also means that goals become shared across the supply chains in an open and clearly defined way – so everyone can benefit from less uncertainty.
It is clear that the IoT can bring huge benefits to many industries, including construction. The advantages are most often presented in terms of cost reduction, but also include better designed (including tailored or bespoke) systems through evolutionary improvement, better understanding of customer needs and uses leading to improved services and improved reliability through better monitoring and maintenance of assets and systems.
However, it is vital that integrating the Internet of Things into solutions is adequately planned and managed, and involves the commitment of senior management. Failure to have such buy-in can leave the development to be more project-based rather than strategically positioned. One of the key considerations for IoT implementation, security, has already been identified as a serious concern, especially when thought of as project-based.
To ensure that the implementation of IoT-based strategies can realise their potential without adverse consequences, it is important that businesses properly assess the business benefits, and conduct appropriate risk assessment. Once the strategy is clearly analysed and the decision made for IoT-based strategies, appropriate solution design and risk management for system life cycles should be undertaken. To minimise the risk of security breach likelihood and impact businesses should ensure that the system is able to prevent, identify, manage responses to and recover from system attacks.
Professor Carsten Maple
Director for Cyber Security Research
University of Warwick