IoT OEMs for Smart Cities Will Require Smart Supply Chains

By Logan Wamsley

One of the most prominent buzzwords floating around the electronics sector is “efficiency.” While this is not a particularly new development – efficiency in terms of product size versus power output have always been prioritized – this term has recently took on a variety of additional connotations that many analysts claim is going to be a cornerstone of the rapidly expanding IoT market.

IoT is much more than a product like a watch that collects data on how many steps you take. Instead of looking inward at the individual, many new IoT products are more concerned with looking outward at improving the efficiency of the world around them. As the population continues to expand and migrate toward urban developments, cities are facing a looming challenging of creating a reliable infrastructure capable of accommodating the influx of residents without compromising overall quality of life. According to the U.S. Census Bureau, despite declining birth rates, the U.S. population increased a total of 0.6 percent in 2018. In 2016, all but one of the nation’s most populous cities experienced population growth. Established infrastructure from public lighting to public transportation to clean water access to electrical utilities are simply not equipped to hold up against such strain. To cope, building managers need to acquire data to understand which pain points in their jurisdiction require the most immediate attention. This is the basic goal of what we now refer to as a “smart city”: a city that uses IoT devices and sensors to track, measure, and analyze massive quantities of data in an effort to adjust output and maximize efficiency.

One example of many would be elevators. In 2010, IBM released a survey that found that the average New York City resident spends approximately 22.3 years of their life waiting for an elevator, with 5.9 of those years being actually stuck in an elevator. In response to this dire pain point, the smart elevator market is expected to grow from $12 billion to $23 billion by 2020. Not only are smart elevators faster in a basic sense, but they also stop at fewer floors by grouping riders together, restrict entry if the combined weight is too high, and even adjust the temperature based on rider volume.

Quality of life improvements can be subtle (smart vending machines will soon be able to adjust inventory based on the gender and approximate age of the individual passing by) to quite profound (smart grids that allow consumers to reserve, and even sell back, unused energy), but all of the IoT products needed to complete the smart city vision are linked in their need for the same basic electronic components. The sensors needed for a smart LED lightbulb must be sourced in direct competition with OEMs focused on providing mobile devices, who themselves must compete with various other industries that not long ago would not intersect. By 2021, the IoT market as a whole is expected to double its value to $250 billion, but such growth is wholly dependent on electronic component manufacturers increasing production to meet demand. With lead times for once commoditized components such as passive transistors currently stretching 52 weeks and beyond, this is a concern that for now remains unresolved.

With the specter of allocation issues and electronic component shortages expected to linger past 2020 at least, OEMs who wish to contribute to the smart city vision must place equal importance on creating a “smart supply chain” capable of mitigating the risks associated with today’s market. This means taking stock of where the pain points are in your supply chain in relation to the state of the market, and adopting proactive strategies that maintain the integrity of your product’s life cycle. These pain points can include inventory procurement, secure long-term inventory storage, last time buy processes, and various inventory fulfillment processes. Ignore one pain point, and the probability of a substantial supply chain disruption drastically increases.

The vision of a true smart city is one that is on the cusp of being reality, but the longer supply chains rely on inventory management processes that were not designed to fill such a vast new market, the longer such a vision will be delayed. OEMs are looking outward more than ever before and wearing their innovation on their sleeve – but looking inward at themselves to rectify their own inefficiencies is equally important in order to reach their true potential.