In a recent webinar, Panoramic Power explored some available avenues for food retailers to integrate Internet of Things (IoT) technology into their standard operating procedures. By clarifying exactly what IoT is — a network of physical objects that connect to the internet and communicate with each other as well as with systems, programs and users — how it’s used for business purposes and what applications it might have for food retail in particular, viewers were introduced to many new opportunities.
Safi Oranski, head of business development and IoT at Panoramic Power, begins his talk with a story — one that puts into context the relevance of connected devices within food retail. Recently, Safi set out to purchase a gallon of milk for his family. For the sake of convenience, Safi popped into a CVS near his house. To his disappointment, where there should have been milk, Safi found the entire refrigeration unit covered by sheets of black plastic — the unit was broken. He returned the next day, and the refrigerator was still broken. At this point, what was stopping him from moving on to Walgreens?
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Here’s where the Internet of Things comes in. Imagine if the refrigerator had been connected to a sensor, and that sensor had been sending performance data to the Cloud. Through this constant and comprehensive flow of information, the store manager would have been alerted to unsustainable pressures placed on the refrigeration unit long before the equipment succumbed to outright shutdown.
With data collected and delivered every ten seconds, the store manager would have known weeks ahead of even the slightest change in operating performance, averting lost product (safe food storage conditions are highly regulated and deviations from those conditions requires that the stock be destroyed), lost sales, expensive repairs and compromised customer loyalty.
Trends in the Internet of Things
Even before smart phones became what they are, we’d all become used to the idea that we could locate each other and ourselves with the help of a GPS. Now, with IoT propelling the digitization of the physical world, we can not just track ourselves in relation to a destination, but we can track products, processes and operations in relation to their lifefecycles and goals.
Digitization means that everything we buy arrives wrapped in a lot of data. While consumers appreciate what this means for their ability to conduct low-friction independent research, the real winner is the retailer. Retailers will know which products are selling where, to whom and with what contributing factors. They’ll know how to reduce waste within their operations, push their factors of production to great productivity, avoid downtime, intelligently manage demand response, and expose mismanagement at a granular leve. In short, they’ll know what it takes to carry their business to the next level.
Over the next four years alone, the number of connected devices is set to grow by nearly 170%, opening up a myriad of new business applications and opportunities. Over time, these new business dimensions will no doubt transfrom from valuable differentiators to basic operational requirements — if not in your business structure itself then in your customer’s perception of it. It should go without saying that you’ll want to have been an early adopter of IoT technology and business methods.
IoT Technology in Food Retail
Just in case we’ve gotten a little ahead of ourselves, let’s take a step back. A lot of retailers find themselves tripping over the concept of IoT and at pains to see how it relates to them. Safi breaks it down as follows:
Any device can be integrated into the Internet of Things fabric with the assistance of sensors. These sensors collect and report data gleaned from the device to a central Cloud-hosted storage and processing repository.
From there, a battery of tests are run using the data. These tests — referred to as analytics — convert the raw information into usable intelligence that is communicated back to the system. What that intelligence looks like depends on the application of your IoT interface. It could be an automated inventory management system wherein the stock shelves themselves identify low product inventory and place vendor orders. It could be customer assistance monitors on each aisle that read the chip in customer Member’s Cards, automatically cross-refences their historical purchases and buyer preferences against the available aisle items, and make custom recommendations.
In the case of Panoramic Power, these tests are executed via a machine learning algortihm designed to identify any latent performance/efficiency insights and convert them into actionable directives. With useful intelligence in hand, its just a matter of taking action. These actions may be automated via machine-to-machine communication or they may require informed human intervention. Either way, the point is the same. Device + sensors + cloud + analytics + action = a recipe for IoT success.
The lowest hanging fruit and most accessible application for IoT technology in food retail comes in the form of decision optimization. Sensors and analytics do almost all of the work for you, but no one can replace the role of a qualified manager in deciding how to take action. The goal is that a look at well-processed data can help guide a retailer in deciding his or her next step.
Consider for example a scenario in which the numbers suggest that 30% of your energy is wasted on faulty refrigeration. You need to take action and repair, reconfigure or replace your machinery.
In food retail specifically, the Internet of Things offers retailers opportunities in four critical areas:
- Customer experience
- Supply chain
- Operational excellence
- New revenue streams
There is room to grow in all four of these areas, but due to time limitations Safi chose to focus on opportunity number three: Operational excellence.
Starting an IoT Project & Examples
Safi also touched on some of the common challenges met by food retailers. Namely, budget, data overload, security, disparate systems and locations and the question of where and how to start. In indentifying your point of entry and dipping your toes before diving into the vast ocean of IoT, Safi suggests something close to a silver bullet solution to working around or through those challenges.
If there is one thing to bear in mind when considering an IoT project, it should be this: “Think Big. Start Small.” Don’t be intimidated by the massive data involved in smart buildings, or the type of tech that could take ten years to build up to. To attempt everything all at once will most likely result in your business achieving nothing, so take a step back and strategize.
Your first IoT project needs to be low-risk. Traverse the experience curve, building essential competencies and taking whatever lumps might come without making your broader operations vulnerable. Remember that even if you’re ready for change, in all likelihood some other team members or partners will be reluctant. By making a low-risk investment and proving your case, you’ll be clearing the way to build up in the future.
Here are the eight steps you should take in gearing up for your first IoT project:
- Identify your business goal.
It has to be strategic, and it has to be something you believe that you can achieve. No matter the size of your business, choose one small goal and focus on it.
- Identify critical assets and largest contributors.
For example, the biggest contributor for energy will be refrigeration and lights.
- Decide on performance targets/ KPIs.
Quantifiable benefits such as reduced downtime, improved maintenance schedules, etc.
- Research the options & technologies available to you pursuant to your goal.
No man is an island. You’re gonna need help. Whether it’s technical know-how, a comprehensive solution package, or a strategic partnership, be sure you’re sourcing the best available options for your specific needs.
This is where the rubber meets the road and your master plan rolls into motion.
- Data collection.
The most important part of your IoT project. If you’ve set things up properly, it can also be the easiest.
- Analysis: KPI outliers, performance gaps and benchmarks.
Let analytics do its work. If there are outliers and signs of waste and malfunction, the system will alert you.
- Actions: Decide to change your store’s settings or behavior.
Knowledge meets power. weild it wisely.
Having access to such comprehensive and appropriately contextualized data illuminates the path to greater profit; whether that means reconfiguring the settings on your refrigeration unit, calling in for equipment servicing before things go sideways or turning down the AC just one or two degrees.
Safi concludes the webinar with some examples of companies that have leveraged IoT to better understand their operations and build out new capabilities. Consider Tesco’s iPhone app, which allows customers to compile digital shopping carts by scanning physical objects, wherever one might find them, with delivery directly to your door. Or how Schwan’s, originally an ice cream truck company, pairs its physical door-to-door, on-the-spot sales and delivery model with predictive data intelligence to send highly contextual house-specific purchase recommendations directly to their driver’s handheld devices.
Similarly, Auchan uses connected technology to match online ordering with offline, drive-through pick-up, and Kroger uses smart sensors to monitor and automatically adjust its freezer settings to keeps its frozen foods properly frozen.
These are some great examples of how IoT opens a whole slew of new opportunities for innovation and competitive differentiation. The options available to food retailers are increasingly limitless with the Internet of Things enabling early adopters to stand apart from the crowd and create new or augmented operational models. Whether you like it or not, the industry is moving in the direction of IoT — you’d be well-served to position yourself at the front of the pack.