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How IoT Will Completely Change Supply Chain


You might not realize it, but we live in the middle of the fourth industrial revolution, where the internet integrates with physical objects. The Internet of Things (IoT) is slowly becoming the reality; millions of smart devices connect to the internet and communicate with one another seamlessly.

Everything — from your fitness wristband to a commercial truck — will send data to a cloud, which will provide businesses with useful, actionable information. For logistics, connected smart devices have an endless potential to transform and enhance all processes, operations and services.

The idea of the IoT isn’t all new. Many industries have been using sensors and tracking devices, transmitting and gathering data, then using the collected information to enhance business processes. Trucking companies can attach sensors to trailers to track location – this has been happening since the early 1990s.

But, the concept has changed due to cloud-based technology and the ability to share data instantly. Before, companies had their own applications and networks for data delivery and analysis; now, cloud services allow companies to store, process and share data with other participants in real-time. For the transportation industry, IoT provides immediate evidence to supply chain performance and allows companies to make knowledgeable decisions.

IoT is expected to become a disruptive trend in the logistics industry in the near future, changing the rules of supply chain management. An IoT-supported supply chain will be able to:

  • Precisely predict demand of each item at every point of sale
  • Optimize routes and shipments in real-time
  • Eliminate delays and shortcomings in inbound supply
  • Customize and change orders in the middle of production
  • Maintain optimal inventory volume

Transportation. The Internet of Things will provide a new level of transport visibility and connectivity. Sensors will track more than freight; they will track the freight’s condition, the truck’s location and the package’s security. Real-time tracking provides better customer service and more convenience for the recipient, with the option of changing time and address of delivery. The IoT could help facilitate new ways of shipping freight, like drone delivery.

Inventory management. With IoT technology in place, a company would be available to find the exact demand of every product type in each retail store. This will be made possible with bar-code scanners. A company will capture detailed sales data during checkout, allowing for precise demand planning with greater speed and agility. The same data could be shared with the company’s vendors and supply chain partners, to provide them with an actual picture of inventory. Suppliers will be able to plan inbound shipments and avoid delays.

Warehousing. The IoT will be able to eliminate manual labor and time-consuming tasks for warehouse operations. For example, wireless readers on each pallet will share data on freight volume and dimension with the WMS for further processing. There will be no need to manually count products or measure the dimensions of LTL parcels – this information will be captured (quickly) by smart devices. Warehouse sensors will scan the temperature and humidity to ensure the optimal condition for each stocked item, and alert workers if needed.

Data analysis. Cloud-based technology and smart devices provide end-to-end supply chain visibility. The ability to capture and interpret huge amounts of real-time information will make data analysis more essential. It creates unique insight into the supply chain and transportation processes, including drawbacks and opportunities. The good news is that cloud technology could already be implemented, while IoT innovations are still emerging.

The IoT revolution has only just begun, but it will evolve quickly. According to Gartner, 4.9 billion connected things will be in use in 2015, and will reach as much as 25 billion by 2020. Logistics companies should define the problems that IoT might help with and adopt technology that will support their business goals.

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