Why the IoT Is a Tool for Continuous Improvement

Consider how Amazon defines continuous improvement, and the role that Internet of Things technologies can play in that mission, to illuminate your firm's path into the IoT.
By John Rossman

At the time that Amazon integrated Six Sigma into its operations, the company was experiencing a disconnect in a process it calls SLAM, which stands for its "ship, label and manifest" process. Every time a printer or other item is ordered on Amazon, that product is placed into a box at an Amazon fulfillment facility, then is labeled, sorted and shunted through the facility until it is eventually placed in an outbound truck. That's the SLAM process.

When Six Sigma was introduced, packages were labeled and moved down conveyor belts before being manually sorted and delivered to the proper docking station. This worked well most of the time, but there was no final confirmation that each package had actually made it onto the correct truck. What's more, there was no visibility—for the company or for customers—regarding where a particular package was in the outbound process. As a result, packages were occasionally missorted.

An occasional missort doesn't sound like a big deal, but throughout the course of a year, such issues can cost a company like Amazon millions of dollars. More importantly, even a single missort breaks Amazon's underlying promise to its customers that all orders will arrive in their hands on time.

For Amazon, the solution was to create a positive automated confirmation, or "visibility," that every package had moved correctly through all logistics checkpoints after its shipping label had been applied. The change was simple in concept, but incredibly complicated in implementation.

To execute this change, Amazon installed sensors and readers across its conveyor system. The sensors would automatically scan a package's bar code as it moved through the SLAM process. Since packages were scanned to destination-specific staging areas, the sensors allowed Amazon to track the whereabouts of specific packages at any given time in the process. Furthermore, as Amazon employees loaded those packages onto the outbound trucks, scanners mounted on the bay doors would alert them if a package were about to be loaded into the wrong vehicle.

By creating a positive-confirmation system for its packages, Amazon lowered its missorts to within Six Sigma's 0.0004 percent accuracy range. That's fewer than four packages missorted out of every million.

Integrating IoT-Driven Continuous Improvement into Your Operations
There are several questions that you can ask yourself to help identify situations that might benefit from an IoT-driven continuous-improvement process:

• What operating condition information would be valuable to your company?
• What manual data entry or logging does your business currently perform?
• What incomplete and inaccurate data exists in your business?
• What inspections and audits are being carried out?
• What shrinkage, damage or underutilization is occurring?
• What are the operating risks?
• What are the quality issues and drivers of customer contacts?

John Rossman is the author of The Amazon Way on IoT: 10 Principles from the World's Leading Internet of Things Strategies, and a managing director at Alvarez & Marsal, a global professional services firm. Prior to working at A&M, Rossman was an executive at Amazon, where he launched its third-party selling platform and ran its merchant services business. He can be reached at jrossman@alvarezandmarsal.com.

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