What is the role of IoT in supply chain management?

What is the role of IoT in supply chain management?

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The Internet of Things (IoT) has transformed supply chain management by enabling businesses to gain more visibility into their operations and optimize their processes. By incorporating IoT devices and solutions into their supply chains, companies can track their inventory in real-time, monitor the condition of their goods, and streamline their logistics. In this article, we will discuss the role of IoT in supply chain management, the benefits, products, solutions, improvements, market size, and the amount of savings that companies can achieve using IoT.

Role of IoT in Supply Chain Management:

The IoT has revolutionized supply chain management by enabling businesses to collect and analyse data in real-time, automate their operations, and improve their efficiency. IoT devices such as sensors, RFID tags, and beacons can be integrated into various supply chain processes to monitor and track goods throughout the entire supply chain.

IoT devices can help businesses optimize their supply chain management in the following ways:

  1. Real-time tracking: IoT devices can track the location, condition, and status of goods in real-time. This helps businesses to monitor their inventory levels, track the movement of goods, and optimize their logistics.
  1. Predictive maintenance: IoT devices can be used to monitor the condition of equipment and predict when maintenance is required. This helps businesses to avoid unexpected downtime and optimize their maintenance schedules.
  1. Supply chain optimization: IoT devices can be used to optimize supply chain processes by providing real-time data on inventory levels, transportation routes, and warehouse operations. This helps businesses to improve their efficiency and reduce costs.
  1. Increased visibility: IoT devices can provide businesses with greater visibility into their supply chain operations. This helps businesses to identify areas for improvement, reduce waste, and increase customer satisfaction.

Benefits of IoT in Supply Chain Management:

IoT has a significant impact on supply chain management, and businesses can reap several benefits from incorporating IoT devices into their supply chain operations. Here are some of the benefits of IoT in supply chain management:

  1. Increased efficiency: IoT devices can help businesses to automate their supply chain processes, reducing the need for manual intervention and improving their efficiency.
  1. Real-time visibility: IoT devices provide businesses with real-time visibility into their supply chain operations, helping them to make informed decisions and optimize their operations.
  1. Improved quality control: IoT devices can be used to monitor the condition of goods in transit, reducing the risk of damage and ensuring that products are delivered in good condition.
  1. Enhanced customer experience: IoT devices can help businesses to improve their customer experience by providing real-time tracking information and ensuring timely deliveries.

Products and Solutions:

There are various types of hardware products that are used in IoT for supply chain management. Some of the commonly used hardware products are:

Sensors: 

Sensors are one of the most widely used IoT devices in the supply chain. These sensors can be attached to various objects such as containers, pallets, and even individual products. They collect and transmit data such as location, temperature, humidity, and other environmental conditions. This data can then be analysed to optimize the supply chain operations.

Benefits:

  • Improved inventory management: With sensors, businesses can track inventory levels in real-time, which helps in avoiding stockouts and overstocking.
  • Better asset utilization: By monitoring the usage and condition of assets in real-time, businesses can optimize their utilization and avoid downtime.
  • Reduced waste: Sensors help in monitoring environmental conditions such as temperature and humidity, which can reduce waste due to spoilage or damage during transportation.

Limitations:

  • Battery life: Sensors rely on batteries, and their lifespan can limit their use. Businesses need to factor in the replacement cost of batteries while evaluating the feasibility of using sensors.
  • Cost: The cost of sensors can vary based on their functionality and the volume of sensors required. High costs can limit their adoption in smaller businesses.

RFID (Radio-Frequency Identification) Tags: 

RFID tags are small electronic devices that store data and can be attached to objects such as pallets, containers, or products. They communicate with RFID readers, which can capture data without the need for direct contact.

Benefits:

  • Improved supply chain visibility: RFID tags can help in tracking inventory and shipments in real-time, providing businesses with greater visibility into their operations.
  • Faster data capture: RFID tags can capture data much faster than manual or barcode scanning, making supply chain operations more efficient.
  • Improved accuracy: The use of RFID tags reduces the risk of errors associated with manual data entry or barcode scanning.

Limitations:

  • Range limitations: The range of RFID tags is limited, and businesses may need to invest in additional readers to ensure complete coverage.
  • Interference: The use of RFID tags can be affected by interference from other electronic devices, which can lead to data loss or errors.
  • Cost: The cost of RFID tags can be higher than other forms of identification such as barcodes.

GPS Trackers: 

GPS trackers are used to track the location of vehicles, containers, or products in transit. These trackers use GPS technology to transmit location data to a central server, which can then be accessed by businesses.

Benefits:

  • Improved logistics optimization: GPS trackers provide businesses with real-time data on the location of shipments, which helps in optimizing logistics operations.
  • Improved security: GPS trackers can help in preventing theft or loss of goods by providing businesses with real-time location data.
  • Better customer service: GPS trackers can help businesses provide more accurate delivery estimates to customers, improving customer satisfaction.

Limitations:

  • Battery life: GPS trackers rely on batteries, which can limit their use. Businesses need to factor in the replacement cost of batteries while evaluating the feasibility of using GPS trackers.
  • Coverage limitations: GPS trackers may not work in areas with poor network coverage, which can limit their usefulness in some regions.
  • Cost: The cost of GPS trackers can be higher than other forms of tracking such as RFID tags.

The hardware products used in IoT for supply chain management have various benefits and limitations. Businesses need to evaluate these factors while selecting hardware products for their operations. Factors such as cost, technical limitations, and the need for real-time data should be considered while selecting the hardware products for IoT in the supply chain.

Platform Providers:

In addition to hardware providers, there are also platform providers that offer IoT platforms for supply chain management. These platforms enable businesses to manage their IoT devices, collect data, and analyse data in real-time. Some platform providers include:

  1. SAP: SAP offers an IoT platform for supply chain management, which enables businesses to track goods, optimize logistics, and improve customer service.
  1. Oracle: Oracle offers an IoT platform for supply chain management, which enables businesses to monitor and manage their supply chain operations in real-time.
  1. PTC: PTC offers an IoT platform for supply chain management, which enables businesses to optimize their supply chain operations and improve their efficiency.
  1. Siemens: Siemens offers an IoT platform for supply chain management, which enables businesses to monitor and optimize their supply chain operations using real-time data.

Improvements made using IoT:

The integration of IoT devices and solutions into supply chain management has led to significant improvements in the following areas:

  1. Inventory management: IoT devices enable businesses to monitor their inventory levels in real-time, reducing the risk of stockouts and overstocking.
  1. Logistics optimization: IoT devices enable businesses to optimize their logistics by providing real-time data on transportation routes, traffic conditions, and delivery times.
  1. Predictive maintenance: IoT devices enable businesses to predict when maintenance is required, reducing the risk of unexpected downtime and improving equipment performance.
  1. Supply chain visibility: IoT devices enable businesses to gain real-time visibility into their supply chain operations, helping them to identify areas for improvement and reduce waste.

Market size and savings:

The IoT in supply chain management market is expected to grow significantly in the coming years. According to a report by MarketsandMarkets, the global IoT in supply chain management market is expected to reach $10.3 billion by 2025.

In terms of savings, businesses can achieve significant cost savings by incorporating IoT devices and solutions into their supply chain operations. According to a report by McKinsey & Company, businesses can achieve cost savings of up to 30% by using IoT devices to optimize their supply chain operations. These cost savings come from reduced inventory costs, improved logistics efficiency, and better asset utilization.

Conclusion:

The integration of IoT devices and solutions into supply chain management has transformed the way businesses manage their supply chain operations. By providing real-time data on inventory levels, transportation routes, and warehouse operations, IoT devices enable businesses to optimize their operations, reduce costs, and improve customer satisfaction. With the IoT in supply chain management market expected to grow significantly in the coming years, businesses that adopt IoT solutions can gain a competitive advantage and achieve significant cost savings.

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