The Good, the Bad, and the Ugly of IoT in the Supply Chain

| October 19, 2015 | 0 Comments

GinaRoosthumbnailMost of us would agree there are several real-world benefits of connected devices that will enable supply chains to run more efficiently across product development and into lifecycle management processes. That’s the good news. The bad news is figuring out security risk, and the ugly news is the impact of new players and start-ups in the Internet of Things (IoT) space on the electronics components supply chain. Most of these companies have never had to forecast for manufacturing production, which could lead to major hiccups in the supply chain.

Let’s focus on the bad and ugly news. Security is one of the biggest challenges that faces all companies involved in the IoT supply chain. But over the past six to 12 months, industry players and organizations have made great strides in moving towards security standards.

One of the most recent is a collaborative initiative among players and academia – the Internet of Things Security Foundation (IoTSF). With this group of companies, the industry is making some of its first moves towards a global industry standard for security. The initiative will be vendor-neutral, global and collaborative, and is already backed by more than 30 organizations, including global brands and academic institutions, according to the IoTSF.

“The formation of the Internet of Things Security Foundation has been through a rigorous process to make sure it is fit for purpose. With so many concerns and a new complexity of security in IoT, it is important that we now start the necessary work in earnest to address known, yet not always addressed, and emerging vulnerabilities,” said John Moor, VP segment development at NMI and IoTSF director. “The scale and scope of the issues are formidable and as such they require a formidable response. This can only be achieved effectively by working together, so I am delighted to announce IoTSF is open for business and invite organizations to back the mission and join us. Together we can raise standards and make it harder for criminals, adversaries and rogues of all denominations to exploit us.”

Industry analysts agree that one of the biggest challenges in the IoT space, is security, along with related privacy issues, when it comes to smart home and IoT device users.  Which is why many institutes and organizations are working on standards for privacy policies for sharing data over the Internet.

Semiconductor companies have made great strides in developing security protocols and technologies. Look at Intel’s Enhanced Privacy ID (Intel EPID) identity technology with more than 1.1 billion EPID certificates deployed. The company recently announced that both Atmel and Microchip are collaborating with Intel on security for the IoT. Both companies are adopting Intel’s EPID identity technology to help improve interoperability in securing IoT solutions, said Intel.

There are also security partnerships. For example, IBM’s partnership with Texas Instruments (TI) was formed “to develop a secure, cloud-hosted provisioning and lifecycle management service for IoT devices.”

There also are developments around open security. Last year, technology leaders, including Atmel, Broadcom, Dell, Intel, Samsung, and Wind River, formed the Open Interconnect Consortium (OIC) to develop an open and secure connectivity framework for the IoT to ensure the interoperability of devices.

In addition, the AllSeen Alliance, a cross-industry nonprofit open source consortium, has about 170 members, at the last count. A few months ago, the alliance announced its fourth major code release for the AllJoyn open source code – AllJoyn 15.04 – with “higher performance, extended scalability and enhanced security features.”

Now for the ugly news. The IoT is made up of a potpourri of products, ranging from sensors and microcontrollers to wireless and connectivity solutions and modules, and new and emerging companies that don’t have expertise around product engineering and the supply chain. These components are being integrated into single systems to connect to a host of devices from thermostats and LED bulbs in consumer applications to machine-to-machine communications in manufacturing and logistics applications. There also is lots of connectivity innovation happening in the automotive and medical sectors.

This has led to some challenges around supply chain management. There are many startups and developers working on new product development that simply don’t have the expertise around supply chain management, and they need design help around selecting and buying the right components for their new designs.

“The industry is becoming more and more complex as new customers enter the fray—the boom in IoT and connected technology and the ease of designing products online now is creating a host of new companies that didn’t even exist four or five years ago,” said Alan Bird, president of Arrow Electronics Inc.’s Americas components business, in an earlier interview.  “ is even rolling out collaborative design tools on its website to help innovators along their path to market. It’s challenging for a new company to accurately forecast production schedules their first time out of the gate, so we do tend to see a lot of miscalculations in this respect.”

There are “IoT Accelerators” or “IoT Incubators” sprinkled around the industry that are designed to mentor and provide resources to IoT companies around product engineering, marketing, and supply chain. One recent example is the 2016 TechrIoT XLR8 six-month program that is providing IoT companies at any stage with “resources to validate product engineering and design, assess market potential, access supply chain financing and connect with anchor customers and channel partners.”

But most of these accelerator programs offer a limited number of slots, and not all new companies will meet the criteria to participate in these programs. So where can these new companies get the help they need? This is where distributors can play a key role. Many of them have design and components expertise in-house and offer supply-chain services to help them better forecast their requirements., an Arrow company, has on-hand, authorized inventory valued at more than $9 billion to assist with shortfalls.

Forecasting already is one of the biggest challenges for OEMs, even for well-established supply chains, let alone for new companies, which also face a lack of resources and clout in the industry. Hand-in-hand with forecasting issues are challenges around inventory management/optimization, cost containment, and cost reduction, according to a new report from eyefortransport (eft).

Distributors can connect these new customers with component suppliers and new component options, while also helping in the areas of forecasting, sourcing, and inventory management to ensure they receive the parts they need when they need it.

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Category: Featured Blogs, Smart Purchasing

About the Author ()

Gina Roos is executive editor of Electronics Purchasing Strategies. She can be reached at

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