The business community has been contemplating the advantages of an Internet of Things (IoT) — a system of automated smart devices talking with each other without manual (human) intervention – for roughly two decades. We’ve been pondering how we might combine informational and operational technologies to enhance all forms of industrial, manufacturing, and logistical operations.
We are already using IoT to enhance transportation and logistics. However, many individuals, especially corporate supply chain managers, are unaware of how mature IoT technology is. Consequently, they are not using it to its fullest capacity.
What is IoT in Supply Chain Management (SCM)?
IoT in SCM is defined as the use of the internet of things (sensors, smart appliances, RFID tags, edge processing, and the cloud) to simplify and automate the supply chain and logistics tasks in order to reduce human effort, minimize errors, improve quality, speed up delivery, and increase the shelf life of the equipment.
The global digital supply chain industry is anticipated to grow at a CAGR of 13.2% and exceed $13 billion by 2030, as per research. This is largely due to advancements in IoT in SCM.
Why is IoT so important in SCM now? In the last several decades, there has been a complete transformation in the global supply chain management systems. Furthermore, the arrival of e-commerce platforms has altered the entire logistical sector. Every day, more shipments are processed than ever before, and consumer needs have skyrocketed rapidly.
In order to meet all of these demands and thrive in a highly competitive marketplace, the supply chain and logistics sector must implement IoT extensively.
Who Benefits from IoT Implementation in Supply Chains?
The benefits of IoT in SCM are multifaceted and felt by all the stakeholders involved; this includes:
- Raw material suppliers at the extreme upstream of the supply chain: IoT solutions are used by raw material suppliers to monitor their technical operations. For instance, they may collect real-time information on cattle health, monitor forest fires, and evaluate oil composition inside pipelines.
- Product and equipment manufacturers: Manufacturers may use IoT solutions for real-time monitoring of their processes and equipment health. They are able to detect bottlenecks and make the appropriate modifications, thereby decreasing downtimes, boosting asset usage, and enhancing productivity.
- Warehouse managers: The Internet of Things enhances inventory monitoring and increases warehouse operations’ visibility and efficiency. Monitoring storage conditions contributes to the preservation of perishable items via IoT technologies.
- Transportation operators: IoT increases the transparency and accuracy of logistics by providing logistics operators with real-time information on the location and condition of every asset. Using this information, they can monitor and optimize the entire delivery path in the event of alterations or delays. Additionally, one can ensure the safety of perishables by identifying variations from the approved transit parameters.
- Distributors and retailers in the downstream of the supply chain: IoT solutions improve the collection and loading-unloading of items at the endpoints of the supply chain. This improves selection precision and handling productivity. A solution for the Internet of Things (IoT) may help track things throughout shelves, enhancing inventory visibility, as well as monitoring shop traffic to improve the presentation of products and space utilization.
Benefits of Integrating IoT at Key Points in the Supply Chain
Using IoT with supply chain management results in:
1. Optimal asset utilization
With the enhanced connections provided by IoT, supply chain management and logistics teams may optimize their fleets, offer more intelligent route planning, and discover stalled/missing assets. These teams may also analyze the effectiveness of assets, allowing operations to be fine-tuned in order to maximize the number of deliveries.
2. Real-time visibility
The Internet of Things enables supply chain executives to link trucks, equipment, and gadgets for real-time work status updates. This may provide an end-to-end view of the supply chain, from the manufacturer to the client through the warehouse. Therefore, instead of having a work status stated as “in transit,” managers are provided with the exact vehicle’s exact current location. This helps them to make prompt choices in order to maintain the efficient movement of commodities.
Real-time tracking is especially beneficial for high-value and temperature-sensitive commodities. IoT devices may flag deliveries that have exited a safe temperature zone, preventing customers from receiving ruined or spoiled items.
3. Better demand forecasting
By automatically gathering data, IoT devices can enhance demand forecasting by eliminating human errors in data collection. Managers of supply chains may forecast demand based on both historical and real-time data. Stock-level data, for instance, may be utilized to forecast future demands and automate purchases. IoT enables organizations to utilize data that would be challenging or impossible to manually obtain.
4. Enhanced customer experiences
A more interconnected supply chain also contributes to enhanced customer service. The availability of information to supply chain management via mobile applications makes delivery-timeline forecasting an accurate discipline. One can also rapidly identify delivery issues and manage client expectations. Significantly, alternate delivery arrangements may be made to make sure service-level agreements are fulfilled.
5. Collaboration across supply chain stakeholders
IoT provides an overview of the influence supply chains have on businesses. This is particularly crucial for increasingly complicated product networks, which are often fragmented into a number of data silos. IoT facilitates the dismantling of these barriers by providing relevant and timely data to teams across a company or even across several enterprises. They can work more efficiently together to eliminate any supply chain problems or bottlenecks.
6. Minimal paperwork
Documentation is a typical source of dissatisfaction for employees, especially in last-mile logistics, wherein drivers are often accountable. Using IoT technologies, organizations may automate their most tedious and time-consuming administrative activities, like confirming a trucker’s freight broker guarantee or completing a bill of lading. It also maintains an audit trail of data that can be used later for compliance checks, without any manual paperwork.
7. Predictive maintenance
Discovering when supply chain parts/elements should be serviced based on temperature, dryness, vibrations, and other data sets is an additional advantage of IoT in SCM. This enables businesses to arrange repairs during scheduled downtime rather than awaiting a vehicle, equipment, or another piece of machinery to break down — perhaps during a production cycle. This also restricts the problem to a single machine, as opposed to the entire supply chain.
8. Less admin workload
IoT technologies facilitate asset inspection and management. Administrators of the supply chain may now depend solely on technology to oversee resources, rather than manually inputting data or using traditional inventory equipment. Sensors, RFID tags, lighthouses, as well as other technologies allow managers to retrieve vital information for each shipment, like maintenance directions.
9. Optimized energy use and sustainability
The Internet of Things has evolved into a sustainability booster because it may help businesses comply with supply chain sustainability guidelines and environmental regulations. You may acquire an exact portrayal of how resources such as water and electricity are consumed, implement sustainable fleet management techniques, and more. It also permits large-scale sustainable initiatives, which would be unachievable with conventional (non-connected) systems.
How to Unlock the Benefits of IoT in Supply Chain Management?
To fully realize the above benefits, organizations will need to:
- Invest in connectivity technologies: IoT systems and devices significantly depend on internet connectivity and other short-distance technologies, like Bluetooth and NFC. As internet coverage expands and 5G becomes accessible, this problem will automatically resolve itself.
- Address the skill gaps and promote digital literacy: Warehouse personnel and truck operators must be trained and instructed on the security standards and recommendations for utilizing IoT-led supply chain administration systems.
- Ramp up data storage and processing infrastructure: The vast amount of data generated by IoT devices is both an advantage and a challenge. There must be sufficient server capacity to store and analyze acquired data. In addition, data governance regulations are required to achieve the correct results.
- Invest in IoT security: Before migrating to fully linked systems, a secure And trusted framework is necessary. Data vulnerabilities may result in external assaults and breaches. Supply chain managers may counteract these attacks by employing security robotics as well as automation and hardware monitoring.
The internet of things will revolutionize the future of business operations, and this is especially important for supply chains, which rely overwhelmingly on physical assets. Consider Bosch Sensortec (a company that recently launched quantum sensors for IoT) or Pod Group’s smart label for IoT in SCM, and several other IoT innovations in CES 2023. The future is truly here.