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How is IoT Transforming Supply Chain Management

By Akhil SundarJune 7, 2023, 10:55 a.m. Application development company
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IoT Sensors: Revolutionizing Supply Chain Visibility and Tracking

IoT sensors are transforming supply chain visibility, enabling real-time tracking of goods, optimizing inventory management, and enhancing operations.

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Discover how IOT is transforming supply chain management with real-time tracking, predictive analytics, and optimized processes. Keep up with the times!


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The Internet of Things fondly referred to as IoT, is changing how many businesses worked up till now. Supply chain management (SCM) is also a sector that has seen many changes coming. IoT basically refers to a network of physical devices, sensors, software, etc., that can collect and share data via the Internet. 

Today, IoT has been instrumental in helping varied businesses serve their customers better, reduce the costs of doing business, and improve the efficiency of the supply chain. Supply chain management  services company relates to all the activities starting with raw materials and ending with delivering a product to the end consumer.  

The SCM is made up of many complex operations, including demand management, product planning and control, inventory management, etc. However, appropriate implementation of IoT in SCM can help to simplify complex processes and drive more revenue. 

SCM – Current Challenges

The supply chain is undoubtedly complex involving myriad processes, stakeholders, and touch-points. Today SCM faces numerous challenges because of these different processes and their speeds.  

1. Less Real-time Visibility

Lack of visibility is one of the biggest supply-chain challenges. To run a supply chain efficiently, the stakeholders must have clear visibility as regards the movement of goods and materials. Poor visibility naturally leads to delayed and wrong shipments and this leads to a complete loss of control over available resources and their flow. 

2. Difficult Inventory Management

Managing inventory in SCM boils down to making sure that there are enough raw materials stocked to deliver orders on time. Here, stakeholders face the challenge of managing large volumes of materials. Neither the shortage or excess availability of resources would work; both would seriously affect the process efficiency. 

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3. Cash Flow Management

Yet another major challenge is managing funds for meeting the expenses. In SCM, almost always, stakeholders are always under pressure because of increasing raw material costs and shipping charges. Moreover, when products have to be delivered to the customer on time, the cash flow related to storage, shipping, transhipment, manufacturing, packaging, distribution, and more have also to be managed. 

4. Forecasting Demand

Customers of today have constantly evolving demands. Managing these ever-changing customer demands is a big challenge for SCM. It is also an integral part of this exercise. If the demand forecast is inaccurate, there is a loss of resources and money and this, in turn, can disrupt the functioning of the supply chain. Stakeholders must strive to gather relevant data from past sales and apply analytics to subsequently create an accurate demand forecast layout so that there is no further resource/money loss. 

5. Right technology Implementation

It is important to realize that by implementing the right technology a number of these problems can be overcome easily. Stakeholders have too many on their hands today, IoT, AI, ML, etc., and are confused about which one to choose. When implemented in the right way, these technologies would be able to offer improved efficiency, better workflow, increased accuracy, etc. Ultimately, the real challenge would lie in choosing the best-suited technology and implementing it properly and effectively in your specific supply chain.

Communication Gap Between OT and IT

In manufacturing plants, there are two primary components: Operational Technology (OT) and Information Technology (IT). OT refers to systems that control and monitor physical machinery and devices, while IT manages digital information, including computer hardware, software, network infrastructure, storage, and cloud computing.

These two areas are often managed separately due to their distinct personnel, architectures, and protocols, making integration across both legacy and new systems complex. The differences in their processes and languages create a communication gap between IT and OT teams, often exacerbated by outdated or poorly connected networks.

IoT and How it can Change SCM

IoT can alter and also digitize the majority of processes related to SCM. This can be accomplished by connecting smart devices and sensors and allowing them to further exchange data with one another. Listed below are a few critical IoT solutions that can work for supply chain management.

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1. Improve Real-time Visibility

One of the best benefits that SCM enjoys with help from IoT is improved real-time visibility. IoT sensors would be able to generate real-time data on the different properties of raw materials and goods. As an example, IoT makes it possible for stakeholders to see the exact location of goods and then make a fair estimate of the delivery time of the goods to the specified destination. IoT further helps to track specific parameters like the temperature and humidity of goods from wherever you are located. This means you can track goods with more accuracy, reduce resource wastage, and also improve overall efficiency.

2. Enable Predictive Maintenance

With IoT in place, it is possible to implement predictive maintenance in the supply chain. Supply chain managers would be able to predict the failure of say, machines, in a process control environment, by analyzing data that is shared by IoT devices and sensors. This can help to cut down costs, cut machine downtime, and improve efficiency. Overall, predictive maintenance helps to improve the performance metrics of the machine and its life.

3. Enhance Customer Experience

IoT implementation in SCM also allows for an enhanced customer experience. Data from IoT devices can let customers know the exact location of their goods by providing real-time or live updates. Once they know the correct statuses of their orders, customers are in a better position to manage their affairs related to the delivery of these goods. This in the longer term would serve to improve customer loyalty and lead to improved revenues. 

4. Automation

SCM involves several repetitive tasks including data entry, order tracking, sending emails, inventory management, etc. IoT can be implemented in SCM to automate many of these mundane and repetitive tasks. This can help the organization save lots of time and effort and also improve the productivity of the supply chain managers. They can now invest more time in core business needs and strategies than in repetitive tasks. This type of automation helps to improve overall efficiency and also helps to reduce errors.

5. Enhance Inventory Management Efficiency

Inventory management is a challenging task. Using IoT sensors can help businesses to gain real-time insights into their inventory status, and lead them to make informed decisions and further prevent product shortages. Such insights also help to predict future inventory requirements based on customer demands. IoT devices also provide information about physical factors such as leakages, product damage, broken packaging, etc.

6. Track Assets Easily

IoT solutions can be designed to facilitate asset monitoring and tracking. Here, instead of manually logging in the asset data, supply chain managers can make use of IoT solutions incorporating sensors, RFID tags, etc., to check the status of every asset item. This is a great time saver.

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IoT in Supply Chain Management – Benefits

  • A properly designed IoT supply chain provides real-time data on factors like temperature and location of goods, and this can help customers to track their goods with more accuracy.
  • IoT devices mounted on machines help to keep you informed as to when the specific machine requires maintenance thus helping you avoid unnecessary and unplanned machine downtime. 
  • An IoT-enabled supply chain helps you efficiently manage the inventory system without material shortages or transport delays.
  • A properly planned IoT supply chain solution allows customers to be aware of the status of their orders as well as shipping details at any point in time and from anywhere.
  • IoT systems can be equipped to automate mundane tasks that are related to supply chain management. This can help you save a lot of time and effort.
  • With properly designed IoT solution implementations, managers make better decisions and can forecast more accurately using the data that the IoT devices generate.
  • Properly designed IoT supply chain implementations can work entirely on software without any human intervention and this means higher productivity and efficiency.
  • When IoT devices are coupled with sensors, they can provide real-time data on prevalent environmental conditions. This can help to reduce wastage in supply chain management.
  • IoT sensors in place ensure improved safety, as they can detect hazardous conditions and can alert workers to avoid potential risks.
  • IoT in the supply chain leads to improved efficiency and reduced wastage, leading to savings in time and money.

Implementing IoT in Supply Chain Management – Points to Consider

Implementation of IoT systems in SCM is gathering more steam because of its power to enable more visibility and control over the entire set of operations. SCM is a multifaceted system having many moving parts, and it is not so simple to add an effective IoT solution. Given below are a few points to consider and best practices that you can consider from the very beginning of the implementation.

1. Internet Connectivity

It is compulsory to have a stable internet connection that will allow you to utilize the full potential of IoT. Therefore, you must check the details with the internet service provider.

2. Employee Training

Even though most operations will be automated with IoT systems in place, the employees will have to operate devices and gadgets appropriately. This means they must be given adequate training before assigning relevant work.

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3. Security

Security is a major challenge while implementing IoT technology. Therefore, it should be ensured that the IoT solution provider offers the best security options during its implementation.

4. Cost

Be wary of the costs incurred during IoT solution implementation. The costs depend on factors such as the quality and features of the equipment, installation, maintenance, service charges, add-ons, etc. 

5. Compatibility

Make sure that the IoT solution you decide to implement is compatible with your other areas of the supply chain. This helps smooth operation.

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Final Thoughts

Implementation of IoT solutions can dramatically improve the performance of a supply chain. And in the long run, it can bring in many more added benefits to all the stakeholders involved. 

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FAQs

IoT solutions implementation in supply chain management makes it easier to locate goods, track their movement, identify delays in transit, plan alternative routes, monitor storage conditions and factors, and estimate their time of arrival at a specific location.

IoT's network of sensors and devices and the data that they generate and share form the useful link between the objects and the data in the supply chain. This is transmitted over the Internet to provide useful analytics and thereby the decision-making power to any business.

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