Understanding The Potential Of IoT In Supply Chain

The world of supply chain management is experiencing exponential growth and change, largely thanks to the proliferation of the Internet of Things (IoT).

IoT refers to a wide range of internet-connected edge devices, such as sensors, wearable tech, smart thermostats, and any other piece of hardware that promotes real-time data collection at the point of use.

As your business strives to remain competitive in an increasingly complex and globalized market, it’s vital that you tap into the potential of IoT in supply chain management.

Here’s everything you need to know about implementing this technology into your business.

What is IoT in Supply Chain?

IoT in the supply chain involves the integration of physical devices, such as sensors, RFID tags, and GPS trackers, with digital systems to monitor and manage the movement of goods and materials.

These devices collect data at various points along the supply chain, providing insights into the status and location of products.

You can also use IoT devices to measure equipment performance and environmental conditions. A centralized platform then analyzes the data to provide real-time insights into your operations and reveal potential product issues.

Here are the key components of IoT in supply chain settings:

Sensors and Devices

Sensors and edge devices represent the cornerstone of the Internet of Things. These physical components collect data on various parameters, such as temperature, humidity, location, and the movement of goods.

Connectivity

IoT devices communicate through networks like Wi-Fi, Bluetooth, and cellular infrastructure to transmit data to central systems.

This ongoing connectivity provides real-time insights into the location and status of your products.

Data Processing and Analytics

The Internet of Things gathers data and sends it to a centralized platform. That platform processes and analyzes the information it receives to derive actual insights.

While you can set up your centralized system via an on-premises model, most organizations prefer a cloud-based solution.

User Interface

The user interface is your dashboard for tapping into the data gathered by The Internet of Things devices. A user-friendly interface ensures that your data is accessible, easy to digest, and readily available anywhere.

7 Key Benefits of IoT in Supply Chain Management

Implementing IoT and supply chain management offers numerous benefits for your business, employees, trade partners, and customers.

Here are seven key advantages of adopting an Internet of Things-driven supply chain management strategy:

1. Real-Time Visibility

Traditionally, you have little insight into the status and location of your products while they are in transit. Depending on your supply chain management model, you may even have little data about their status while they are in storage. This can be particularly problematic if your supply chain relies on a complex network of third-party warehouses.

IoT technology gives you real-time insights into the status of goods and materials throughout the supply chain. You can use this visibility to monitor inventory levels, prevent stockouts, and optimize warehouse and distribution operations.

2. Predictive, Not Reactive, Maintenance

Waiting for your equipment to break down is a recipe for disaster. The traditional, reactive maintenance model sets your business up for failure and increases the likelihood of costly, unplanned downtime.

Integrating Internet of Things devices into your production equipment can help you transition from a reactive to a predictive maintenance model.

You can continuously monitor the productivity and status of machinery and schedule maintenance to prevent major breakdowns.

In the long term, a proactive approach to maintenance will increase the equipment life cycle and reduce your long-term machinery cost.

3. Improved Inventory Management

Inventory mismanagement can lead to stockouts, supply shortages, and unhappy customers. IoT enables you to accurately and automatically track inventory in real-time.

This capability reduces the risk of overstocking or understocking while allowing you to maintain adequate liquidity to seize emerging business opportunities.

Improving your stock management is critical to long-term supply chain resilience. You can analyze data and detect trends in consumer preferences, adjust your safety stock levels, and put other stop gaps in place to ensure your company is capable of meeting current demand.

4. A Better Security Procedure

The Internet of Things can help protect your company's reputation and the purity of the products you provide. IoT devices can be particularly effective at improving the security posture of businesses that deal with perishable goods, such as food products.

You can track an item's journey throughout the supply chain, from raw material collection to manufacturing to final delivery to retailers and consumers.

Use this data to identify potential weaknesses in your supply chain and address them before you fall victim to theft or burglary.

5. Unwavering Quality Control

Your customers trust you to consistently deliver safe, high-quality, functional products. Failing to do so can tarnish your reputation and leave room for your competitors to erode your market share.

Sensors and monitoring equipment promote better quality control by providing real-time data regarding environmental conditions like temperature and humidity.

You can use these insights to rapidly identify concerns, such as a rise in temperature in a cold storage area. If a problem arises, you’ll be able to act fast to mitigate the danger to your products and prevent catastrophic spoilage.

6. Short and Long-Term Cost Savings

The Internet of Things helps lower short—and long-term costs by optimizing operations.

For instance, you will gain end-to-end visibility into your supply chain and can use this information to identify potential inefficiencies in the way you source or distribute goods.

Additionally, IoT devices provide actionable performance data about your equipment and machinery. You can leverage this information to make targeted repairs before a major breakdown occurs.

The end result is less downtime and fewer production delays.

7. Informed Decision Making

IoT provides a wealth of data that can be analyzed to gain insights into your supply chain performance. These insights enable you to make informed decisions faster.

You'll also be able to pinpoint areas for improvement and implement strategic changes that make a meaningful impact on your company’s profitability.

The bottom line is that the Internet of Things helps you make smarter decisions faster. Acting fast in the midst of unexpected challenges will make your supply chain more resilient and less susceptible to disruptions.

Best IoT Applications in Supply Chain

How do you get the most bang for your buck when implementing IoT and supply chain management? Here are some of the most exciting use cases of Internet of Things devices in the supply chain. You can use these devices to:

Track Assets

GPS and RFID tags allow your business to precisely track the location and status of assets in real-time. You can monitor the location and direction of travel of high-value items, such as machinery, expensive goods, and vehicles.

Enhancing your asset tracking capabilities will give you peace of mind, knowing that your high-value items are safe and secure.

Manage Your Vehicles

IoT enables you to monitor your entire fleet in real-time. You can gain actual insights into the location, speed, fuel consumption, and driver behavior associated with each vehicle.

More importantly, you can attribute this data to specific drivers, shifts, and assets. Use this information to promote safe practices, protect your fleet, and reward drivers who exhibit optimal performance.

Protect Perishable Goods

Many businesses use IoT sensors like smart thermostats to record temperature and humidity levels during the storage and transportation of perishable goods. This use case ensures that products remain within the required environmental conditions, maintaining quality and compliance.

Modernizing the way you monitor perishable goods also promotes better consumer safety and could reduce the likelihood of a foodborne illness outbreak.

Should an outbreak occur, you can track down the source of each shipment and issue targeted recall notices to protect the public.

Automate the Warehouse

Warehouse management represents a foundational part of your supply chain strategy and one of the biggest cost factors.

By automating the warehouse, you can reduce the labor intensiveness of inventory accounting, picking, and equipment monitoring.

Gather Data and Access Insights

Internet of Things sensors are exceptionally effective at data collection. You can use them to gather information from every level of your supply chain, providing a holistic view of your operations.

Guide Maintenance Activities

Are you tired of relying on generic maintenance recommendations to maintain your equipment? IoT sensors can provide real-world insights into the condition and performance of mission-critical equipment.

You can use this data to predict maintenance needs before breakdown occurs and reduce the long-term costs of ownership.

For more insights into how your business can incorporate IoT, cloud computing, and artificial intelligence into the supply chain, check out Vaibhav Vohra’s guest blog post in Computer Weekly.

Challenges and Solutions in Supply Chain

The Internet of Things can solve a multitude of supply chain challenges. However, as with any new technology, IoT sensors can also create new hurdles that your business must overcome.

Here are several such concerns and how to solve them:

Data Security and Privacy

Installing Internet-connected sensors across your entire supply chain drastically increases your digital footprint. Expanding your digital presence creates a wider attack surface for hackers and cybercriminals.

Therefore, you must take steps to ensure data security and information privacy for your business, your consumers, and your employees.

During the IoT implementation process, ensure that you implement robust security managers, such as encryption, access controls, and regular security audits. Limit who can access and alter your IoT devices to safeguard them against unauthorized use and adulteration.

Integration With Existing Systems

The key to the success of the Internet of Things is interconnectivity. Your devices must be fully integrated with legacy systems, which can be complex and costly. Your business should choose an IoT platform that offers seamless integration capabilities and partner with an experienced vendor to ensure smooth implementation.

Prior to rolling out your IoT solution, it may be wise to evaluate the remaining lifespan of your core software, such as your enterprise resource planning technology.

Upgrading to a more robust ERP solution can make it easier to implement IoT devices at scale.

Data Management

The day your IoT devices go live, you are going to be inundated with mountains of new data. Do you have the infrastructure to organize and analyze all of that information? If not, it’s vital to modernize your data management infrastructure before implementing IoT in the supply chain.

If you have not already done so, consider moving away from on-premise business management tools to cloud-based alternatives.

Transitioning to the cloud will provide you with the scalable infrastructure necessary to collect, store, and use all of the data generated by IoT edge devices.

Interoperability

Different IoT devices and platforms may use various communication protocols. These discrepancies can create interoperability issues. Adopting industry standards and working with vendors that offer interoperable solutions can help you overcome these hurdles.

Cost of Implementation

The initial cost of implementing Internet of Things technology can be high. Your business should consider the long-term ROI and potential cost savings you’ll enjoy from making the switch.

Launching a pilot project or planning for a phased implementation can also help you keep costs down. A small-scale rollout of IoT technology can serve as proof positive that the ROI will be worthwhile.

Use these results to encourage stakeholders to support a larger-scale implementation.

Scalability

As your business grows, you’ll have to build out the IoT infrastructure to accommodate increased data and devices.

Choose a scalable, cloud-based platform and plan for future expansion to ensure your solution meets the company’s needs both now and in the future.

IoT Strategies to Implement

Here are some practical steps to help you set the stage for a smooth implementation process:

Determine Your Objectives

Identify the specific goals you want to achieve with the Internet of Things, such as improving visibility, reducing cost, or enhancing security.

Clear objectives will guide you in the implementation process and help measure your success.

Start Small and Scale

Begin with pilot projects to test the efficacy of IoT Solutions on a smaller scale. Doing so allows you to identify potential issues and make adjustments before you've invested substantial time and resources into the project.

You can also use a small-scale project as proof of concept, encouraging better buy-in from the top down.

Choose the Right Tech

The success of your initiative hinges on the quality of the technology you choose. Select IoT devices and platforms that allow you to meet your business needs and are compatible with your existing systems. Consider factors such as the user-friendly nature of the interface, data processing capabilities, and scalability.

Focus on Data Management

What are you going to do with all of that data? Before you know it, you will be drowning in a mountain of information, and you need to be able to effectively manage it if you want to enjoy a strong ROI.

Develop a robust data management strategy to handle the large volumes of information generated by edge devices. You also need the analytical tools necessary to transform that information into actionable, easy-to-digest insights.

Prioritize Security and Compliance

Expanding your digital footprint can open the door to a wide range of security and compliance concerns, especially if you operate in a tightly regulated industry. Therefore, you must make data security a priority from day one.

If necessary, bring in an external auditing team to help you identify and remedy security weaknesses.

In addition, you should revamp your compliance policies to ensure they align with your Internet of Things initiative. Identify potential concerns and take the necessary steps to protect your business from regulatory penalties.

The Future of IoT in Supply Chain

The Internet of Things is only going to get better and more advanced from here. One of the trends that we are most excited about is the continued rollout of 5G networks, which will provide faster and more reliable connectivity for edge devices.

The integration of artificial intelligence and machine learning with the Internet of Things will enable more advanced data analysis, predictive analytics, and autonomous decision-making in the supply chain.

Combining IoT with blockchain technology represents another notable trend. Using blockchain to document the data gathered by edge devices can create an immutable record of a product's journey throughout the supply chain.

Lastly, organizations are increasingly pushing toward unprecedented levels of interconnectedness with their trading partners. Businesses can maintain end-to-end visibility across the supply chain through the strategic implementation of the Internet of Things.

Learn More About IoT in Supply Chain

Integrating internet-connected edge devices into your SCM strategy will revolutionize how you manage inventory, interact with suppliers, and make decisions.

Fully embracing this supply chain revolution starts by choosing the right partners and solutions providers.

Contact Epicor to learn more about how you can integrate the Internet of Things into your supply chain management workflows and create a more nimble organization.

Our customizable solutions can provide actionable insights while transforming your business into a more flexible and resilient entity.