The Internet of Things (IoT) is rapidly revolutionizing every aspect of inventory management and the global supply chain. In a world where new technology meets constant innovation, the Internet of Things is helping usher in the Fourth Industrial Revolution. According to a recent Bain Insights Brief, business-to-business (B2B) applications of the Internet of Things will generate $300 billion in revenues by 2020. Additionally, a McKinsey Global Institute analysis found the IoT’s potential contributions to inventory management, supply chain management and logistics could reach between $560 billion and $850 billion per year by 2025.
What Is the IoT?
Forbes defines the Internet of Things as the process of "connecting any device with an on and off switch to the Internet as well as to other devices." The Internet of Things (IoT) is a growing network of devices including everything from cellphones, headphones, wearable devices and lamps to just about any other device you can imagine.
Blume Global reports many companies are now implementing IoT devices to increase the visibility of their supply chains. IoT devices use sensors to measure and report on many critical environmental factors including location, temperature, light, humidity, movement, and handling speed. They can also monitor the storage conditions of products which helps businesses ensure quality management throughout their supply chains. IoT technology in warehouses and retail stores can also improve visibility in production, inventory management, and predictive maintenance.
IoT and ‘Smart Warehouse’ Management
Warehouse errors can be costly. Inaccurate operations and errors require more labor to fix, adding unnecessary costs. IoT devices can help reduce manual labor, errors, and help to increase processing speeds and overall warehouse efficiency. Companies are installing IoT sensors in their warehouses to monitor the movement and use of material and other assets inside their facilities. Businesses are also using sensors on shelves to transmit real-time inventory information to their management system. IoT and smart warehouse management is helping to eliminate expensive and time-wasting mistakes by ensuring inventory levels and equipment locations are clearly known and constantly monitored.
While always critical, the real-time accuracy of inventory has never been more important. This is largely due to the rise in online shopping. Today’s consumer expects to point, click and receive their orders within days or sometimes hours. Today it's essential that consumers have real-time accurate information of an item’s availability and expected delivery date. This helps reduce out-of-stock items and improves customer service.
However, the traditional supply chain was not designed to handle a large volume of small orders for immediate delivery. Whether or not a particular item is in stock online or in a nearby store not only affects potential sales, it also can have lasting effects on customer loyalty and a company's reputation. Manufacturers, retailers, warehouses and logistics providers are all struggling to adjust to meet these new demands on their supply chains. Because of these new consumer buying habits, companies are adjusting their internal processes, staffing and technology to meet the needs and expectations of demanding consumers.
10 Ways IoT Is Impacting Inventory Management
1. Real-time data from IoT devices help create a more streamlined supply chain.
IoT devices use different technology to aid in touchless data collection. IoT devices use GPS and other technologies including Radio Frequency ID (RFID) chips, smart devices and mobile sensors to help track and authenticate products and shipments. According to Blume Global, the large amount of data now available from IoT devices, wearables and retailers provides real-time visibility into inventory
2. IoT devices provide precise location monitoring and enhanced inventory tracking.
According to The Daily Plan IoT, products tagged with IoT devices help provide more efficient storage and distribution.Tracking inventory and route planning through IoT devices can identify where and when goods are delayed in transit. This aids in emergency planning and helps identify alternative ways to speed up the supply chain.
3. RFID and touchless data collection from IoT devices help create error-free processes and reduce shrinkage.
RFID tags used with IoT devices to keep track of physical inventory can be the key to inventory management. RFIDs help make inventory management more efficient by preventing the need to scan barcodes or labels. Rather than only keeping track of numbers, businesses can now easily track their inventory and supply chain in real time. Interconnected IoT devices allow businesses to monitor the days to the expiration of goods, which is very useful for preventing spoilage and waste. IoT devices also help protect against theft and lost products, by helping businesses constantly monitor their products’ locations.
4. IoT devices help improve logistics and warehouse efficiency.
IoT devices and the growing bandwidth offered by 5G technology are helping to improve the logistics of warehouse management. Along with the use of smart shelves and storage bins that communicate stock levels in real time, IoT devices can help identify usage patterns. This continual feedback helps streamline coordination between warehouse operations and various logistics providers.
5. Predictive analytics from IoT devices helps identify potential risks and enhances performance measurement.
Smart inventory management using IoT devices provides real-time visibility across warehouse, production and distribution centers. Strengthening legacy inventory management systems with the quality and data that IoT sensors and systems can provide helps to lower inventory costs and reduce inventory management errors. When IoT data is integrated into ERP systems, it helps improve record-keeping and predictive maintenance, ensuring that the best possible data is available for everyday business decisions.
6. IoT devices enhance fleet inventory management.
IoT is very useful if an organization’s inventory includes equipment and vehicle fleets. Real-time tracking using GPS technology to collect data about where the equipment or fleet vehicles are located helps keep track of inventory and prevent loss. Enhanced GPS tracking from IoT devices allows businesses to capture load discrepancies and notify logistic partners and consumers in real time. Monitoring the goods during transport also helps prevent spoilage, theft and unauthorized use.
7. IoT devices help provide better forecasting and more accurate lead times.
The Daily Plan IOT states using IoT systems to track inventory helps improve forecasting accuracy. IoT devices help determine the lead times needed to assemble all the necessary manufacturing parts. Excessive lead times can then be easily identified to avoid bottlenecks caused by critical parts missing that can quickly halt production. Businesses are also able to integrate forecasted weather changes in route schedules to enable better delivery decisions.
8. IoT, robotics and augmented reality (AR) integrations help improve processing speeds and efficiency.
To help speed up the storage, handling, and shipping of inventory, warehouses are relying more on IoT-enabled devices including wearables, smart glasses, and augmented reality (AR) technology. Robotic and artificial intelligence solutions are also being used in warehouse and logistics operations along with warehouse workers to improve performance and reduce errors.
9. IoT devices help reduce loss and equipment damage.
IoT devices are helping to improve inventory management by helping businesses easily keep track of an item’s precise location. This helps reduce the time it takes to find inventory. All of the available real-time data helps provide valuable insights to support strategic and tactical business decisions.
10. IoT devices help ensure regulatory compliance.
One of the most promising uses for IoT devices is the potential to streamline traceability and inventory management compliance in highly regulated manufacturing industries. When the IoT is combined with new blockchain technology it can help ensure regulatory compliance and chain-of-custody regulations are being met throughout the supply chain. The growing integrations of IoT devices, ERP and Inventory Management software are helping to provide increased supply chain compliance on a global scale.
IoT Challenges and Opportunities
Technology is rapidly powering changes across supply chain networks. An inventory manager’s greatest challenge happens when there isn’t enough data available to make an informed decision. Updating legacy inventory management systems with IoT devices helps improve overall efficiency by bringing greater tracking, traceability, quality management and compliance.
In recent years, warehouses have been transforming into critical business hubs that increase efficiency and speed across the entire supply chain. Many organizations have started using IoT devices for inventory management. However, there are concerns about IoT implementation that must be considered. Businesses must take into account the investment cost, security, and scalability of integrating IoT devices within their current inventory management system.
Despite these concerns, the cost of the IoT technology continues to decrease as the amount of available IoT integrations for inventory management continues to advance. For many organizations, IoT devices are rapidly becoming a cost-effective and efficient solution for inventory management. The large amount of real-time data from IoT devices can help organizations identify opportunities to improve overall logistics, inventory and supply chain management.
Learn more about Grainger’s KeepStock Inventory Management Services