Internet of Things

How IoT Is Optimizing Supply Chains for Efficiency & Accuracy


Gartner defines the Internet of Things as a network of sensors that track and report on their environments to improve operational performance for cost savings. The dominance of IoT was imminent owing to its promise for higher efficiency, accuracy and cost-effectiveness.

While IoT has perceived and applied use cases in many industries, one area where IoT can revolutionize the status quo is supply chain management.

What’s Supply Chain Optimization?

In the yesteryears, supply chain optimization included tasks like getting the lowest trucking costs, locating the warehouse at a reasonable distance, managing inventory and the likes. However, during this era, change was manageable since it happened at a slower pace.

Today, emerging technologies like IoT, AI and ML promise a competitive edge to those who dare to implement them. Customers have bigger expectations, and businesses have no option but to comply.

Therefore, supply chain optimization today aims to cut costs for businesses and relay some of the advantages to the customer- by improving accuracy and efficiency of processes.

Unexpected disruptions impact distribution and transactions all the time, but supply chain optimization helps manage these exceptional scenarios with grace and stability. With better visibility across the supply chain, decisions can be made in real-time, based on hard data and not guesswork.

This is where the Internet of Things comes in.

How IoT Improves the Efficiency of Supply Chains

IoT can rebuild the satire cycle of supply chains. By strongly connecting individuals, information, intelligent things and processes into an ecosystem, IoT can measure, track, capture and exchange real-time data.

IoT-powered devices can capture important information throughout a shipment’s journey, offering visibility into the supplier network- which grows to as many as 100,000 suppliers for organizations like Walmart.

IoT can help track shipments from the moment they leave a warehouse through several checkpoints to the destination.

Data collected through these stages can help administer the integrity of goods in industries such as food and beverages and pharmaceuticals where the optimal temperatures, environmental conditions and such are key to ensuring product reliability when it comes to the consumer. 

Additionally, IoT devices can also predict the arrival of products, enabling organizations to forecast delivery efficiently and mitigate delays.

IoT can help track all those factors holistically. Moreover, vehicle breakdowns are a common malfunction, often caused by pressure issues in vehicle tires. Michelin, a leading tire company, leveraged IoT to track real-time information from vehicles, control tire pressures, reduce breakdowns and keep shipments running on time with optimal safety.

IoT is one of the top warehouse technologies in that it can help locate goods, saving time and costs, enabling a human-less warehouse management system.

In a nutshell, here are a few ways IoT can help optimize supply chains for efficiency-

  • Real-time location tracking
  • Storage conditions monitoring
  • Product arrival forecasting
  • Warehouse management
  • Contingency planning

How IoT Improves the Accuracy of Supply Chains

The IoT helps collect and drive insights from data. By now, we all know that data is king. Accurate data at the right time can make all the difference for organizations to plan for demand and provide excellent customer service by sidestepping common pitfalls of the supply chain management equation.

With IoT, replenishment decisions can be made accurately based on data analytics and forecasting. Those would include the frequency, quantity and route of replenishment. Moreover, a quick insight into anomalies can help detect trends such as a sharp drop or uptick in demand- enabling real-time adjustments.

In all the use cases discussed so far, IoT creates linked networks that are simpler to use and far more powerful than complex ones. With cloud-based IoT solutions, businesses can leverage data analytics and make insights accessible to all stakeholders.

The IoT also reduces the probability of human errors by providing extreme accuracy in shipment tracking, on-road vehicle management and asset monitoring.

Why is it Important to Optimize Supply Chains?

The global supply chain and logistics market is expected to surpass $15 trillion by 2023, as per a recent report by Transparency Market Research. Despite a quick boom in the supply chain industry, development and innovation have been slow. 

Not many cutting-edge technologies have made it to supply chains, meaning they are still not optimized. But that in no way implies that there isn’t a desperate need to optimize supply chains.

Here are a few reasons why it’s vital to transform supply chains with the IoT:

  • Responsive supply chain – In an omni-channel industry, organizations that increase their use of IoT will benefit from an intelligent, responsive and transparent supply chain that accurately locates, tracks and measures inventory movement through sensors. A responsive supply chain will come with the agility to speed up or down, driven by customer demands.
  • An optimal warehouse – Organizations can operate an efficient warehouse, thanks to leading technologies. With IoT, businesses can experience cost reduction, fewer asset losses, inventory optimization and accuracy.
  • An intelligent supply chain – Enhanced connectivity with smart devices and sensors can impact every business area, including customer support, marketing, sales, finances and operations. An intelligent supply chain also cuts down on time and costs by forecasting demand and planning for it.

The supply chains of the future will regulate themselves and take automatic actions augmenting human capabilities beyond what we know today, all thanks to leading technologies such as the Internet of Things.

If you’ve got an idea to help organizations optimize parts of their supply chain for efficiency and accuracy, our experts in IoT can help. Reach out to us for our IoT development services.

Subscribe to our Newsletter
Stay current with our latest insights