How the IoT (Internet of Things) Affects the Supply Chain

Although a fairly new term, IoT—or the Internet of Things—has become part of many of our individual lives over the last couple of years. Many of the things you use every day, like an activity tracker to count your steps or a Bluetooth enabled electric toothbrush, are all part of the IoT.

What is the IoT (Internet of Things)?

In fact, the IoT at its core is simply the network of physical objects that can connect to the Internet and collect and share data with users and with other objects. It allows for the automatic capturing of data that may otherwise remain uncollected or be burdensome to collect manually. The term was first coined by Kevin Ashton, who defined the benefit of the IoT like this: “We would be able to track and count everything, and greatly reduce waste, loss and cost. We would know when things needed replacing, repairing or recalling, and whether they were fresh or past their best.” (Forbes.com)

However, it’s important to understand that the IoT is more than a connection of smart devices meant for personal use. As it continues to gain traction as an indispensable technology its effect on businesses—and the supply chain in particular—will become increasingly significant in continued growth.

There are two areas of the supply chain that will see an especially strong impact from the IoT: Improved Transportation Status Visibility and Warehouse and Inventory Efficiency.

Improved Transportation Status Visibility

At the heart of the supply chain is the transportation of goods to their intended recipients—or your customers. Understanding how long items take to reach a destination, road and traffic conditions a driver will face, weather and temperature changes, driver capabilities and more allows for greater control over the success of a shipment.

And this can all be provided by applying IoT technologies to your current transportation network. The base technology needed to do this and increase your in-transit visibility are cloud-based GPS and Radio Frequency Identification (RFID) or bar code technologies that allow for the tracking of both the vehicle that’s delivering your product and the state of the product itself. Both of these can gather accurate, real-time data that can be tracked by everyone in the supply chain from the manufacturer to the retailer.

The data collected is invaluable to optimizing your supply chain. For example, with data collected from GPS positioning, you can be alerted of a problem with a route, such as a traffic jam, before your driver is already stuck in traffic, allowing your driver to re-route and still reach their destination on time. Additionally, sensor data from the truck can alert you to changes in temperature that are crucial to maintaining the quality of temperature sensitive items.

All of this data allows you to monitor freight and make proactive decisions to greatly improve the quality and efficiency of transport.

Warehouse and Inventory Efficiency

Today it is nearly unheard of for an established business to not manage its inventory with barcodes or RFID technology. And this is yet another example of the IoT impacting the supply chain. This technology allows you to automatically capture data from your various products and use it to monitor and predict shifts in demand and automatically receive alerts when replenishment is needed.

For example, with enough data gathered on a certain item, you will be able to see patterns in your customers’ buying habits that allow you to accurately plan your inventory so that you’re stocking as little or as much of an item as necessary, instead of facing excess inventory or back order situations. By having detailed insight into the status of each item in your inventory you’re better able to tailor it specifically to what you anticipate will happen and meet the needs of customers and make cost-effective purchases from suppliers.

Additionally, you could improve the overall layout and flow of your warehouse by using data around customer buying patterns to drive the location you stock items. By strategically setting up items based on factors like frequency of order, items they are frequently purchased with, etc. you’ll maximize the efficiency of warehouse employees, which in turn leads to an overall better managed warehouse and customer experience as items are picked and shipped as quickly as possible.

By relying on automatically captured data through IoT technology to drive business decisions, you’ll be able to optimize your warehouse and inventory management and stay ahead of the curve in your industry.

So, what does all this really mean?

Today, the IoT is still developing and there will still be some time before we understand the full impact it will have on the supply chain. However, it’s a sure bet that in the two areas we mentioned above that understanding IoT technologies and how to leverage them will give you an edge in supply chain efficiency and customer satisfaction.

Are you ready to take it on? The LTX team prides itself on being forward-thinking and innovative in the LTL and Supply Chain industry. Contact us today and let’s make sure your company is using technology and the IoT to stay ahead of the game, and as efficient as possible.