Int. J.
Production Economics 159 (2015) 13
Contents lists available at ScienceDirect
Int. J. Production Economics
journal homepage: www.elsevier.com/locate/ijpe
Editorial
Supply chain management in the era of the internet of things
The term Internet of Things (IoT) was rst coined by MIT in the
late 90s. It refers to a devices or sensors connected world where
objects are connected, monitored, and optimised through either wired,
wireless, or hybrid systems. The characteristic difference between IoT
and the existing Internet has been described as follows: IoT is an
integrated part of the Future Internet and could be dened as a
dynamic global network infrastructure with self-conguring capabil-
ities based on standard and interoperable communication protocols
where physical and virtual things have identities, physical attributes,
virtual personalities and use intelligent interfaces, and are seamlessly
integrated into the information network (CERP-IoT, 2009).
From a supply chain management perspective, the IoT may allow
machine-enabled decision making with minimum or no human
intervention. It deals with integrating and enabling information
communication technologies including RFID, wireless sensor net-
works, machine-to-machine systems, mobile apps, etc. The specic
reference to things refers to the idea that manufactured products
will be part of the extended Internet since they will be tagged and
indexed by the manufacturers during production. Customers can read
tags through mobile applications and use the information connected
to products to inform their purchases, product use and disposal.
Applications of IoT are taking place in sectors such as transportation,
energy, healthcare, pharmaceuticals, retail, manufacturing, product
lifecycle management, recycling, and food traceability. It is predicted
that the number of connected devices will reach up to 50 billion
by 2020.
The adoption of the IoT has the potential to improve operational
processes, reduce costs and risks due to IoT's transparency, traceability,
adaptability, scalability, and exibility. Nevertheless, IoT as an open-
system and a new way of creating value challenges existing largely
static information architectures adopted by a majority of supply chains
(Chui et al., 2010). There is a need for data-driven business models and
decision-making mechanisms to support this new environment.
This special issue of the International Journal of Production
Economics intends to provide a forum to share new and signicant
results related to new infrastructure architectures, tools, techniques,
and business models that can be applied in supply chains and open
environments subject to great uncertainty; novel algorithms in
system planning, control and optimisation under IoT environment;
and best practices in adopting IoT. We accepted 11 papers for this
special issue and they are categorised into the following three areas.
1. Developing business models, architecture, and platforms for
IoT-enabled intelligent decision support systems
The paper, Physical Assets and Service Sharing (PASS) for
IoT-enabled Supply Hub in Industrial Park (SHIP) by Qiu et al.
http://dx.doi.org/10.1016/j.ijpe.2014.11.014
0925-5273/& 2014 Published by Elsevier B.V.
(2015), aims to tackle the main issue in SHIP, that is, a lack of
information sharing which hinders the effective use of scarce land
resources and other capacities of manufacturers' and logistics
providers'. In an IoT enabled SHIP where accurate real time
information can track and trace physical assets, it will facilitate
the automatic optimisation of operations processes such as inven-
tory management, warehousing management, production, deliv-
ery consolidation, truck loading and transport route design. The
research proposes a new business model, i.e. PASS, that abstracts
and binds the physical assets with corresponding management
activities as services, and provides a systematic mechanism for the
sharing of them among all the member enterprises with intelligent
and integrative cooperation. In line with the business model,
a generic information infrastructure is devised that not only enables
real-time interactions among different hierarchies, but also twins the
physical operation ows and information ows effectively. Based on
these designs, a rich set of decision-making tools is worked out to
support various end-users in fullling their daily tasks. These tools
use service-oriented models which are easy-to-deploy, exible-to-
access and simple-to-use through recongurable mechanisms and
XML-based data exchange principles.
In the paper An RFID-based Intelligent Decision Support
System Architecture for Production Monitoring And Scheduling
In A Distributed Manufacturing Environment by Guo et al. (2015),
the proposed architecture integrates the RFID and cloud technol-
ogies to capture real time information from customer orders and
manufacturer plants, which enables optimised decision making on
production scheduling and monitoring to achieve more agile
response and cost reduction. It emphases the vitally important
role of cloud technology in real time production monitoring and
scheduling. Although their study focuses on the distributed
labour-intensive manufacturing sector, the result of the study
can be extended, rescaled, reused, and customised in other
manufacturing contexts.
The paper, Bottom-Up Approach Based on Internet of Things
for Order Fulllment in a Collaborative Warehousing Environ-
ment by Reaidy et al. (2015) proposes a dynamic bottom-up
approach to manage a complex collaborative warehouse where
several manufacturers and distribution companies share physical
spaces and logistics information to enhance overall performance of
their supply chains. The approach is comprised of three inter-
related elements: agents, interactions, and environment. Through
IoT infrastructure and its associated RFID technology with ambient
intelligence platform and multi-agent systems, this approach
enables spontaneous conguration, tolerating partial failures and
management of complex systems. Taking the undergoing project
City Hub as an example, which is designed for order deliveries in
2 Editorial / Int. J. Production Economics 159 (2015) 13
urban and non-urban areas, this paper demonstrates how the
bottom-up approach can be implemented through the applica-
tions' architecture, platform and structure. The fullment process
is then modelled and simulated using multi-agent system archi-
tecture. A new negotiation protocol is developed based on a
comp-eration (competition and cooperation) scenario to provide
local scheduling solutions for the shipping problem based on real
time information sharing between agents and on global optimisa-
tion algorithms (such as solver, game theory, optimisation pro-
gramme algorithms) for agent decision-making.
The paper, Understanding Business Ecosystem Using a 6C
Framework in Internet-of-Things-Based Sectors by Rong et al.
(2015), studies IoT from a business ecosystem point of view.
It uses a 6C framework to understand the IoT based business
ecosystem as a whole. The 6C refers to context, cooperation,
construct, conguration, capability and change, which is consid-
ered as a method to deconstruct a system. The paper identies
3 patterns of IoT-based business ecosystems, i.e. High-Open IoT-
based business Ecosystem, Medium-Open IoT-based business
ecosystem, and Low-Open (Closed) IoT-based business ecosystem.
At the end, it also provides a summary of practical implications to
guide practitioners building an IoT-based business ecosystem.
2. The role of IoT related ICT and its deployment to decision
making on production, transport, and service provider
selection
The paper, The Role of IT-Enabled Collaborative Decision
Making in Inter-Organisational Information Integration to Improve
Customer Service Performance by Wong (2015), collects the
survey data from 188 trading companies. The result of data
analysis reveals that IT-enabled collaborative decision making
improves customer service performance in the supply chain by
facilitating joint organisational efforts to plan and manage inter-
organisational activities, thus reducing the chances of making
conicting decisions. It highlights the importance of developing
supportive IT infrastructure in establishing internal and external
electronic linkages, deploying new IT applications, and satisfy-
ing current business needs in order to achieve operational
improvements.
The paper, Predicting RFID Adoption in Healthcare Supply
Chain From the Perspectives of Users by Chong et al. (2015)
develops a conceptual model through extending the Unied
Theory of Acceptance and Use of Technology (UTAUT) model with
the Big Five factors (neuroticism, conscientiousness, openness to
experience, agreeableness and extraversion) and demographic
characteristics (i.e. age and gender) to predict the adoption of
RFID by physicians and nurses in the healthcare supply chain. The
research model is then tested by employing neural network
analysis. The result suggests that individual differences are able
to predict the adoption of RFID better compared to variables
derived from UTAUT. The result of this study leads to several
suggestions to healthcare practitioners such as training pro-
grammes, the pair buddy system in learning and using RFID
systems, and incentives.
The paper, Contextual Variety, Internet-Of-Things and the
Choice of Tailoring Over Platform: Mass Customisation Strategy
In Supply Chain Management by Ng et al. (2015) identies a
broad visionary approach to Mass Customisation development
that focuses on the role of customer value. It develops a model
on how customer data extracted from IoT can be used by
producers on strategic choices between tailoring and platform
product strategy and species conditions under which each of
them benets providers of goods and/or services, placing a
particular emphasis on the importance of contextual variety of
use and its impact on customisation. The tailoring strategy refers
to a situation when a provider opts to produce multiple varieties of
tailored products and offers them to consumers. The platform
strategy refers to a situation when a provider creates a exible but
standardised platform that allows customers to purchase addi-
tional custom-made products which are developed by other
providers but are compatible with the platform. The result
suggests that platform strategy is more protable when contextual
variety is higher.
Multimodal transport (MT) is a commonly used process in
international transport, as it enables the optimisation and organi-
sation of all transport modes into an integrated continuous system
in order to achieve operationally efcient and cost-effective
delivery of goods in the supply chain. Information communication
technology (ICT) embedded with new technologies such as cloud
computing, IoT and social networking is a key enabler of MT. The
paper, ICT in multimodal transport and technological trends:
unleashing potential for the future by Harris et al. (2015),
identies the barriers to e-enabled MT through assessing 33 EU
framework programme projects and presents an up-to-date over-
view of existing and emerging ICT applications in MT, that is,
clouding computing, Wireless/Mobile communication technolo-
gies and Internet of Things, Web3.0 and Social networking, and
Advances in interface technologies, which may help to reduce
these barriers. In addition, it showcases some best practices for
industry as guidance and inspiration.
The paper, Product Delivery Service Provider Selection and
Customer Satisfaction in the Era of Internet of Things: A Chinese
E-Retailers' Perspective by Yu et al. (2015) focuses on the relation-
ship between delivery service providers selection and customer
satisfaction. The authors propose a triadic model based on the
Asset-Process-Performance framework which includes e-retailers,
delivery service providers and customers. The result suggests that
substantive selective criteria should include consideration of
product delivery service providers' hard and soft infrastructure.
In addition, exibility is a key criterion that will strengthen the
relationship between e-retailers and product delivery service
providers to improve the competitiveness of e-retailers as well
as to satisfy customers. The model is validated through the survey
of 148 Taobao e-retailers.
3. RFID-based inventory management
RFID, as one of main sensors connecting to objects in a supply
chain and transferring real time data for process monitoring and
control, has been widely studied in inventory management. The
paper titled Impact of RFID Technology on Supply Chain Decisions
with Inventory Inaccuracies by Fan (2015) studies both centra-
lised and decentralised supply chains formed by one supplier and
one retailer selling one product. Taking inventory misplacement
and shrinkage as main concerns, three key factors are examined:
RFID xed investment cost, RFID variable tag price and the
shrinkage recovery rate. The result suggests that in a centralised
supply chain when the actual tag price is below the threshold
value or the shrinkage recovery rate is higher than the threshold
value, the retailer could make prots by adopting RFID. In contrast,
in a decentralised supply chain the retailer is much more sensitive
to the sharing ratio of RFID xed investment cost as well as the tag
price than the supplier. Furthermore, the sharing ratios depend on
the retailer's power to make the manufacturer accept a lower unit
prot margin.
The paper, Comparison Of RFID-Based Shelf Replenishment
Policies In Retail Stores Under Suboptimal Read Rates by Thiesse
and Buckel (2015) studies the imperfection of RFID technology and
its impacts on inventory performance. It identies the challenges
 Editorial / Int. J. Production Economics 159 (2015) 13
of implementing RFID faced by decision makers: (a) which tech-
nology is to be used and what level of objects are to be tagged, e.g.
item-level or case-level; (b) limitation of RFID physical constraints
due to its radio communication technology; (c) external factors to
be considered when choosing a specic inventory control policy.
The research simulates the inventory performance based on cost
and stock-out rate in order to understand: how RFID achievable
read rate and cost of tags impact on performance; how item-level
tagging and case-level tagging differs in performance; and how
other constraints such as shelf space and service level as well as
additional sources of errors like misplacements and thefts affect
performance when comparing an RFID-enabled replenishment
process with a traditional periodic review process. The simulation
results suggest that RFID has potential to enhance inventory
performance, however this largely depends on the tag cost and
read accuracy, especially any false reads in case-level tagging may
cause considerable cost increase. Other inuential factors such as
uncertainties in demand, shelf allocation cost, replenishment cost,
different hardware congurations and other unforeseen issues
may have a severe impact on performance. To maximise the
benets of 'RFID, retailers should optimise shelf space allocation
in parallel with exibility to adapt the replenishment processes in
response to customer demand.
We are most grateful to the authors who submitted their
manuscripts to this special issue, and almost 200 referees who
spent their precious time reviewing the manuscripts and provid-
ing constructive comments. We would like to thank Professor B.
MacCarthy who helped us from an early stage set up this special
issue and provided valuable advice as the project progressed.
Special thanks to Professor O. Tang who acted as a gate keeper to
ensure the quality of selected papers. Last, but not least, we fully
appreciate the continuous support from the International Journal
of Production Economics staff at Elsevier throughout the editorial
process.
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Guest editors
Li Zhou
University of Greenwich, UK
Alain Y.L. Chong
University of Nottingham, Ningbo, China
Eric W.T. Ngai
Polytechnic University, Hung Hom,
Kowloon, Hong Kong, PR China