The dawn of the Internet of Things (IoT) is upon us and it is set to revolutionise many industries including inventory management. However, before we can understand how inventory management will be affected by IoT and how we can optimise this, we must first understand what exactly it is.
IoT is essentially a concept where devices are connected to the internet or each other via a wireless connection. This not only includes devices such as coffee makers, TVs and washing machines but also components of devices such as the engine of a car or the drill of an oil rig for example.
It is predicted that by 2020, there will be at least 26 billion connected devices worldwide.
These connections become important as they allow data sharing which then can instigate actions in an anticipatory fashion to make life and business more efficient. In plain terms, this means your car could pick the best route to get you to a meeting on time, based on current traffic conditions. Your alarm clock could send a signal to your coffee maker to start brewing your morning coffee while you are getting dressed for the day. The idea is that with the future of technology, anything that can be connected will be connected. So, what does this mean for inventory management and supply chains?
Impact of IoT on the supply chain
The benefits of IoT on the supply chain are perhaps the most exciting physical manifestations we can observe. IoT in the supply chain creates an unprecedented transparency that results in improved operational efficiencies and revenue-saving opportunities.
A major area of benefit is asset tracking where, instead of using traditional barcodes to scan and record item data, stock items have RFID tags or GPS sensors which can be registered wirelessly. It is then possible to quickly and accurately obtain data and track items from any point throughout the supply chain.
Applications of this can include remote temperature monitoring and control for sensitive products and assessment of time spent in transit or time spent on a shelf before being sold. Obtaining this data can facilitate better quality control and demand forecasting, which of course improves the company’s ability to meet demand and enhances their reputation.
You could perhaps look at remote product tracking with all the data it affords as a way of having ‘eyes’ on the inside of your suppliers’ businesses. And why is this important? Knowing production and transit times of your items allows you to better tweak orders to suit lead times and in response to fluctuating demand. It also allows you to draw conclusions about which suppliers are meeting production and shipping criteria and which need a bit more monitoring to reach expectations. In fact, IBM found that 65% of a company’s value is attributable to its suppliers, indicating this is an area that needs close attention.
Managing different players in the supply chain
IoT is beneficial for logistics and maintenance of the supply chain. The supply chain consists of a series of manufacturing equipment and transportation modes operating in sync with each other. Of course, the more components present, the more difficult it is to streamline the process for optimum efficiency. IoT solves this problem as it enables each component to ‘talk’ to each other rather than requiring human intervention to connect components and ensure the correct action or process happens at the correct time.
The effect of IoT on inventory management software
The interface of IoT with the inventory manager is through inventory management software and there are many features which become far more useful with the introduction of IoT to the supply chain. For example:
- The data incorporated into inventory management software is far more accurate and up-to-date. By reducing these time delays, businesses can enhance accuracy and reduce wastage; inaccurate ordering resulting in too much or too little inventory for demand
- IoT incorporated into the inventory management system makes multichannel retail and management a very real and successful possibility. Monitoring one retail channel is hard enough, let alone if there are multiple locations, modes (such as the brick-and-mortar store, a pop-up store and the webstore for example) and different product lines and consumer demographics associated with each one. It is vital to have a birds-eye view of the entire operation to ensure decisions are made holistically for the best of the company and with each component treated as a part of the whole brand rather than a standalone entity. With IoT, each store and their products can be easily accessed, data obtained and uploaded automatically to the inventory management software and suddenly accurate analyses can be made. The benefits of this capability include being able to proactively redirect incoming or outgoing goods based on which locations need them or are most likely to make the sale. This is all about optimising inventory and ensuring anything ordered can and will be sold through whatever channel necessary.
The take-home message about IoT and the outcome of its marriage to inventory management is that the entire process can then be optimised for efficiency. At the end of the day, this improves revenue and the company’s reputation and makes the commitment to technology and IoT well worth the effort.