Adapting operations to new information technology: A failed “internet of things” application

Abstract

Our setting is the secure data destruction industry in which company trucks travel to distant customer sites to pick up outdated documents containing sensitive information (e.g. social security numbers). Outdated documents are stored in locked containers to be shredded, rather than simply recycled, by the secure data destruction service provider. Currently, no client site inventory level information is available. Due to the lack of inventory information, nearly a quarter of client site visits are wasted as there is no inventory to pick up. Another quarter of client site visits arrive too late. To improve operational efficiency, the firm invented an electronic device to make the containers at customer sites a part of the “Internet of Things” - the containers would be able to remotely transmit inventory level information, thus providing the opportunity for just-in-time inventory pickup. Utilizing this information requires a re-structuring of industry operations from fixed scheduled pickups to dynamic routing. Through heuristic creation and robust testing, we examine the conditions in which the Internet of Things application under consideration would be useful or yield minimal gains. Ultimately, the firm decided not to implement the application as the costs of maintenance and the operational re-structuring outweigh potential gains. Our study has implications for firms that are considering to explore Internet of Things to improve their operations.