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IoT Helps Tackle Business Upgrade and Online Retail Challenges

Internet of Things (IoT) has come into the limelight in the Consumer Electronics Show recently held in the United States. IoT focuses on connecting all objects embedded with smart sensors and identifiers through the internet to obtain information of the related objects including identification, location, status, etc so as to help effective business decision-making as well as boost customer service standards.

Photo: GS1 Hong Kong Chief Executive Anna Lin points out two changes in IoT applications
GS1 Hong Kong Chief Executive Anna Lin points out two changes in IoT applications in recent years
Photo: GS1 Hong Kong Chief Executive Anna Lin points out two changes in IoT applications
GS1 Hong Kong Chief Executive Anna Lin points out two changes in IoT applications in recent years

In an interview by Hong Kong Trade Development Council (HKTDC) Deputy Director of Research Pansy Yau, GS1 Hong Kong Chief Executive Anna Lin said that GS1 has been involved in the evolution of the Internet-of-Things (IoT) since 1999, at a time when a group of American retailers and manufacturers supported the MIT Auto-ID Labs to research for potential usage of radio frequency identification (RFID) in the next generation supply chain. Over the past 15 years, GS1 has witnessed the development of IoT technologies and applications. So far, there are indications that the use of IoT on the apparel and footwear supply chains will become a global trend. It is anticipated that, driven by the online-to-offline (O2O) retail strategies, IoT will be adopted in more consumer goods sectors to offer customers with more caring value-added services.

Yau:  What are the main areas of IoT application?

Lin:  The concept of IoT is to implant objects with chips having smart sensing and identification functions, such as RFID, for automatic data transmission through the internet. When American retailers and manufacturers initiated research on RFID in 1999 to boost supply chain management efficiency, the main purpose was to meet the needs of B2B development. In the intervening 15 years, IoT applications have gradually turned mature and popular. Apart from being used in supply chain management, they are featured in the Chinese government’s efforts in developing smart cities seven or eight years ago. Furthermore, over the past two years, IoT has been used at the consumer level by offering consumers alternative living experiences in the form of wearable electronic products, such as health tracker wristbands and smart apps connected 3D glasses that are now the hottest products.

Yau:  Can you tell us more about the application of IoT in supply chains as well as its benefits?

Lin:  IoT can be applied in different parts of the supply chain. To enhance inventory management efficiency and accuracy, RFID Item Level Tagging has been initiated by American and European retailers for retailing and inventory monitoring to ensure greater replenishment efficiency. At the same time, accurate inventory counts can be achieved in a flexible and time-saving manner by making scans over product shelves using the portable RFID reader.

RFID can also be used in production process management for enhancing production monitoring capability so as to maximise planning effectiveness and facilitate calculation of material quantities needed for production. Take apparel production as an example, the whole production line comprises various procedures. Errors inevitably occur when using the conventional work-in-progress (WIP) management of labelling and recording items manually, thus reducing production and management efficiencies. RFID technology has not only improved production process management, but can also be used in accurately searching for fabric needed for production as well as in labour efficiency management.

Photo: IoT application a growing trend in apparel supply chains (Image courtesy of GS1 Hong Kong)
IoT application a growing trend in apparel supply chains
Photo: IoT application a growing trend in apparel supply chains (Image courtesy of GS1 Hong Kong)
IoT application a growing trend in apparel supply chains
Photo: IoT application a growing trend in apparel supply chains (Image courtesy of GS1 Hong Kong)
(Image courtesy of GS1 Hong Kong)
Photo: IoT application a growing trend in apparel supply chains (Image courtesy of GS1 Hong Kong)
(Image courtesy of GS1 Hong Kong)

In fact, enhancing efficiency is not the only focus in supply chain management; improving value proposition for the stakeholders in a supply chain is also a major concern. Thus, functions offered by IoT, such as product identification, source tracing and quality control, enable enterprises and brand managers to better connect with consumers, satisfy consumers’ right to know, safeguard product safety and offer genuine product authentication.

Yau:  In which industries in Hong Kong are IoT widely applied? Are there any successful examples you would like to share?

Lin:  Any company regardless of size or industry can put IoT on its agenda as long as the application can bring about cost-effectiveness and create value for customers in its operations. Hong Kong companies are very creative, capitalising on the benefits of new technologies as they emerge. Take the Hong Kong International Airport (HKIA) as an example. Its RFID baggage management system is a first in the world. The barcode-based technology in the past failed to recognise baggage with folded or soiled barcode tags and required manual solutions. Given the increasingly enormous volume of baggage to be handled each hour, HKIA began in 2003 to adopt RFID in stages, reworking its baggage identifying and handling system to enhance baggage handling efficiency and accuracy. Now passengers can collect their baggage soon after they get off from their plane.

The large number of styles and the short life cycles in the apparel industry are well suited to the application of the IoT concept in enhancing supply chain efficiency and upgrading consumer value-added services. In fact, there are indications that IoT application in apparel and footwear supply chains has become a global trend. Nonetheless, any innovative business can make good use of IoT. Sik Sik Yuen Wong Tai Sin Temple is an example in point. In order to meet the needs of the large number of the faithful requesting fortune-telling sticks every day, it has implanted micro RFID tags into each stick and equipped bamboo stick holders with sensing readers. Each time before one of the faithful collects a bamboo stick holder for fortune telling, a staff member will in his/her presence verify by RFID that the stick holder contains exactly 100 different sticks. RFID has not only successfully helped substantially reduce the verification time from five minutes to five seconds, but also enhanced accuracy and the faithful’s confidence.

Yau:  The RFID chips embedded in the sticks must be very tiny in size, would they be very expensive?

Lin:  RFID technology is getting increasingly mature. RFID chips today are not only tiny, water resistant and heat resistant, there are even ultra-thin RFID “metal skins” available in the market suitable for use with metals and non-metals respectively. In terms of cost, the price of a tag is now less than one Hong Kong dollar. Besides, it can be used repeatedly. The cost will be further reduced with the gradual adoption of a universal RFID standard across the world.

Photo: Product details such as origin and grade can be assessed by reading the RFID tag embedded
Product details such as origin and grade can be assessed by reading the RFID tag embedded in a pearl nucleus (Image courtesy of GS1 Hong Kong)
Photo: Product details such as origin and grade can be assessed by reading the RFID tag embedded
Product details such as origin and grade can be assessed by reading the RFID tag embedded in a pearl nucleus (Image courtesy of GS1 Hong Kong)

South Sea pearls do not have a grading and authentication system similar to that for diamonds. In view of this, Fukui Shell Nucleus Factory, a Hong Kong pearl nuclei supplier, has decided to set up an “RFID-embedded Pearl Identification and Certification System” for the pearl nuclei it supplies. In this system, an ID code is assigned to each pearl by embedding an RFID tag. By entering an ID code of a pearl into the company’s computer database, it would be possible to know salient data such as the origin, culture time, size, grade and point of sale of the pearl. This will help jewellers and consumers in determining the quality and value of a pearl objectively and scientifically. To make the best use of this tracking system, the company is currently cooperating with an Australian pearl farm which will enter the data of each pearl into a database. These data include the starting date and harvest date as well as the location and environment of the cultivation, the grade assigned by a specialist upon harvesting, etc. By reading the RFID tag, the true value of the pearl can be determined by knowing exactly its origin, variety, quality and other attributes.

Yau:  Are there other IoT application trends worthy of note?

Lin:  With the increasing popularity of online shopping, the use of IoT in implementing O2O strategies is worthy of notice. For example, some retailers have divided their market into different geographic regions. Once an order is received by an online platform, the retailer will use IoT technology to search for physical stores within the locality of the delivery address that have the required product in stock. It will then choose the nearest physical store to make the delivery. With the implementation of O2O retail strategies, it is expected that there will be more consumer products using IoT to offer customers more caring value-added services. As producers of these products, Hong Kong manufacturers will naturally consider using IoT in their production processes to boost efficiencies in production and inventory management in order to better meet customer needs.

Content provided by Picture: Pansy Yau
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