IoT Will Transform Supply Chain Management

Annie Erling Gofus - Mar 21 2022
Published in: Technology
| Updated Apr 27 2023
The Internet of Things collects and analyzes data to improve the supply chain. 

Several technological advances and business trends are affecting the supply chain. The most impactful of these is the increasing use of digitalization (digital technologies that change ways of doing business). This is occurring throughout the sequence of events that make up the modern supply chain.

The first technological frontier on which the digital supply chain is the rapidly increasing prevalence of sensory equipment that connects physical products to the internet is allowing for the collection of massive data sets that can be used to make better decisions about the best time, place, and form of products without overt human interaction.  This phenomenon is referred to as the Internet of Things (IoT).

For decades, tech companies and innovators have been discussing the idea behind IoT. Surprisingly, the first internet-connected toaster was unveiled at a conference in 1989. It had one control, to turn the power on, and the darkness of the toast was controlled by how long the power was kept on. IoT has evolved exponentially since then. Consider that today, more devices on earth are connected to the Internet than people. The internet can connect everything from kitchen appliances to cars to smartphones. 

Combining these connected devices with automated systems makes it possible to collect and analyze data to learn about a process or complete specific tasks. IoT technologies have become integral in supply chain management as companies work to reduce costs and improve the efficiency of the supply chain.

Four ways that the IoT can optimize the global supply chain

Companies and even governments that operate vast numbers of vehicles are more frequently using connected fleet management solutions to make the process more efficient. IoT technology plays a role in improving route optimization, which is the process of planning the shortest, fastest, and cheapest route without compromising efficiency. Route optimization relies on factual data that is collected and analyzed over time.

For companies that move products, IoT technology can assist you in collecting real-time data about potential routes. When used alongside your route planner, IoT can compare routes and determine the most efficient route.

One of the biggest trends poised to disrupt supply chain managers is asset tracking, which gives companies a way to overhaul their operational efficiency by giving them the tools to make better decisions and save time and money. Companies can track their entire fleet simultaneously by attaching IoT sensors to goods in delivery vehicles. Tracking the vehicles alone will give you insights into delivery times, but IoT sensors on the goods being shipped provide an additional layer of security to ensure timely and safe delivery.

Fuel efficiency is a significant factor in the success of an optimized route. It is important to note that fuel consumption is impacted by more than just route length when comparing routes. Instead, driver habits have a direct impact on fuel consumption. For example, speeding, rapid acceleration, and sudden braking result in higher fuel consumption and the cost of maintenance.

IoT technology can send a fleet’s route manager real-time data on driving habits that increase fuel consumption or the chances of an accident. By analyzing this data, managers can address poor and dangerous driving habits to ensure compliance. The same IoT tech tools can lower the cost of maintenance by quickly identifying mechanical problems by measuring engine performance, brake quality, and tire quality.

Several new pieces of technology are already changing how logistic companies and warehouses work. IoT technology such as sensors can help companies organize and locate goods and their containers stored in warehouses of all sizes. This same technology eliminates the need for manual inventory management because the IoT tech updates the inventory as assets leave the warehouse.

IoT reaches can go beyond the warehouse. Some IoT asset tracking systems use global location intelligence to provide supply chain visibility and high-value pallet and package tracking.

The Internet of Things can reduce supply chain bottlenecks

Organizations should equip their supply chains with IoT functionality and the ability to track individual goods both inside their warehouses and en route to their final destination. A recent survey by GT Nexus and Capgemini found that 70% of retail and manufacturing companies have already started a digital transformation project in their supply chain operations.

For example, connections between containers, cargo vessels or trucks, and transportation infrastructures are leading to the development of smart transportation modes that reroute vehicles in real-time based on local traffic patterns, weather events, and accidents.

Supply chain management is complicated and high-stakes — when something goes wrong, it often has cascading effects that affect entire industries. IoT supply chain technology can help managers from manufacturing to transport and delivery to monitor logistics and ultimately prevent bottlenecks in critical supply chain networks.

The possibilities are essentially endless for the IoT to positively impact the supply chain, and many companies have already launched projects related to the development of IoT-enabled supply chain management strategies.