Modern-day organizations consider the sourcing of goods and services as a viable strategy to reduce their production costs. If the production costs are minimized, it will lead to lower prices of goods and services. As a result, more consumers will be intrigued to buy a particular product or service. With the advent of new technologies like the Internet of Things (IoT), marketers can take more calculated decisions.
IoT is an amalgamation of interconnected physical devices that can monitor, report on, send, and exchange data flawlessly. IoT is transforming the supply chain management arena in every aspect. One cannot deny this fact. With the help of sensors, IoT devices assess different aspects of the world around them. These devices also have the power to track and authenticate goods and shipments with GPS and other advanced digital technologies. With the help of procurement agents, organizations can further streamline their sourcing operations.
Relationship between the Internet of Things (IoT) and Supply Chain
IoT devices have enhanced transparency in the supply chain management scenario. The relationships between the Internet of Things and supply chain are listed as follows:
- Track the product location: This is undoubtedly one of the major benefits of IoT. IoT devices can be attached to different storage containers. They can also be attached to raw materials or products. Marketers can track the product location through GPS satellites.
- Analyze the speed of product movement: IoT also helps marketers to scrutinize the speed of product movement. By analyzing the traffic flow of products, marketers can predict how the products will move through the entire supply chain. This is indeed a great benefit for suppliers, manufacturers, and distribution centers. This minimizes handling times to a great extent. Both manufacturers and marketers can be assured of the efficient processing of goods.
- Scrutinize storage conditions: With the help of IoT devices, manufacturers can assess product storage conditions in absolute terms. In this case, the aspects of temperature, humidity, and light intensity must be focused upon. Modern-day organizations tend to hire sourcing experts to monitor product storage conditions. It enables marketers to track the quality of goods through the supply chain. This also minimizes wastage of goods.
- Channelize the movement of goods: IoT devices facilitate goods tracking and route planning within a short period. This is especially beneficial for organizations in times of huge consumer demand and when products are delayed in transit. Suppliers have the option to opt for alternative routes. This accelerates the speed of the supply chain at large.
- Locate products in storage rooms: More often, suppliers face the difficulty to track goods in the distribution centers. IoT simplifies this issue at large. If the products are tagged with IoT devices, it will be easier for suppliers to look for specific products within a large warehouse.
- Administer products just after arriving: Marketers can validate the arrival time of goods flawlessly with IoT devices. It further accelerates administrative tasks in the form of supplier payments or onward shipping requests. Sometimes, procurement agents also perform this role.
Importance of Internet of Things in the Supply Chain
The benefits of IoT in the supply chain management arena are listed as follows:
- Tracking the exact location of goods while comparing it with the statements of stakeholders
- Quick identification of problems for lost and delayed goods
- Real-time shipment with inventory visibility and tracking
- Demand planning and supply become easier as the stakeholders have an idea about when to receive and process products
- Enhanced quality management as the raw materials and finished goods are kept in the best conditions
- Storage and distribution of products become simpler as the goods can be tracked in warehouses very easily
Challenges of Implementing IoT in the Supply Chain
To function properly, IoT devices require good internet connectivity. However, this is not always the case. IoT devices transmit their exact positions to GPS satellites. Some types of IoT accessories require Wi-Fi or Bluetooth for their proper functioning. IoT devices will not work if they are not installed properly. This should be handled with care. Only the professionals can install IoT accessories properly. Apart from these, organizations should focus on the usage of appropriate IoT device for the right task. If it is not the case, these devices can get damaged.
Applications of IoT in Retail and Manufacturing Supply Chains
There are numerous applications of IoT in retail and manufacturing supply chains. These applications are listed as follows:
- Farmers can use this new technology to assess soil moisture
- IoT-enabled cameras help manufacturers to detect defects in products
- Producers can make the most of “just-in-time” manufacturing techniques
IoT holds huge benefits for both marketers and suppliers. With the assistance of sourcing experts, organizations can formulate their procurement strategies. When these strategies are blended with IoT, they yield better results. Implement IoT in your organization’s operational hierarchy and reap increasing benefits.