You’ve Never Heard of the Internet of Goods, but Chances Are You’re Already Part of It

Michael Mandel, the chief economic strategist at the Progressive Policy Institute and a senior fellow at the Mack Institute for Innovation Management at the Wharton School, has just declared the existence of the Internet of Goods. 

Writing in the October 17, 2017 issue of The Wall Street Journal, Mandel defines the Internet of Goods as “our term for the fast-growing digitization of the production, sorting and movement of physical products.” In other words, it’s the rapid digitization of everything we do in warehousing, distribution and fulfillment. 

At Swisslog we’ve advanced this concept under the mantel of Industry 4.0, shorthand for the fourth industrial revolution. Whether you call it Industry 4.0, the Internet of Things (IoT) or the Internet of Goods, these closely allied concepts are rapidly transforming the supply chain, particularly in the burgeoning e-commerce field.

Industry 4.0 building blocks such as automation, robotics, Big Data, sensors, and IoT connectivity, are turning fulfillment centers into smarter, data-driven operations. And contrary to popular belief, this trend toward the digitization of nearly everything is not killing jobs but rather creating abundant new opportunities. According to Mandel:

…does e-commerce destroy more jobs than it creates? So far the answer seems to be no. From the third quarter of 2015 to the third quarter of 2017, brick-and-mortar retail full-time-equivalent jobs fell by roughly 123,000, or about 1%, according to my think tank’s analysis of the latest Labor Department data. Over the same two-year stretch, the e-commerce industry has added some 178,000 jobs in fulfillment centers and electronic shopping firms. In addition, express delivery companies and other local couriers boosted their full-time-equivalent workers by another 58,000.” Moreover, according to Mandel, “our research shows that fulfillment center weekly wages are 31% higher on average than brick-and-mortar retail in the same area.

Amazon has famously stated its intention to add 150,000 seasonal workers to its fulfillment centers this year and you can bet that many of those jobs will become permanent. Even the most highly automated fulfillment centers require workers with a good mix of physical and cognitive skills. Increased automation, says Mandel, “will bring down the cost of distribution, which now amounts to 50% or more of the final purchase price of many consumer goods. That would drive down prices, helping consumers.”

The growth of e-commerce fulfillment centers and the rising adoption of automation in those centers is a win-win for workers, consumers and manufacturers. The future for intralogistics isn’t from a single technology like robotics, or sensors, or even Big Data, but rather, how these elements can be tied together with software to drive operational improvements like fulfilling orders with lower costs. If you want to call that the Internet of Goods, we’re all for it.