Supply chain management has become a complex and demanding profession in its own right. You’re asked to deliver products to customers ever faster while relying on a complex network of suppliers and service providers. You’re asked to minimize inventory and cut costs.
Fortunately, technology is evolving to help supply chain managers meet these often-conflicting needs. Here are 5 ways the IoT is transforming supply chain management as we know it.
1) Creating True Transparency
The Internet of Things is providing greater transparency to all levels of the supply chain. It is more than keeping track of your products on the shelves and as they are run up at the cash register. You can use the same tracking devices, RFID and GPS sensors, to track a product as it is shipped from the supplier to the warehouse to your shelves. And it is starting to give companies insight into items as they are built.
RFID tags and sensors are increasingly used to monitor the temperature, humidity and other factors of perishable items, whether they are medications or ripening fruit. If anything gets damaged, you’ll know it almost as soon as it occurs.
Then you can make informed decisions before you run short since you can estimate when goods will hit the warehouse even as orders are coming in. This process has the side benefit of strengthening accountability. Quality control improves, as does product forecasting.
More transparency also means fewer chances for counterfeiting. By being able to follow a certain product at every single stage in the supply chain ensures its provenance, and could be a game-changer in industries like high-end fashion, or jewelry for instance. When used with technologies like the blockchain for instance, it creates an immutable and verifiable public record of a product’s history, making it close to impossible to falsify.
2) Gaining Greater Customer Knowledge
RFID tags plus closed-circuit TV cameras are not just there to deter theft. They are also being used to track customer behavior. It tells you how they navigate around the store and how many items they put in the cart. You can see how they react to endcap displays and sales. This allows companies to implement dynamic pricing and even user-specific deals.
It provides information to firms on how they could better arrange stock to improve sales. For example, RFID sensors can tell you how long items sit on the shelves before they’re picked up and thrown in a cart, and you get an idea of how often people picked it up but decided not to buy it.
We’re on the cusp of having targeted advertising based on facial recognition. This would allow firms to provide targeted advertising to a person even when they aren’t carrying their electronic device, and it ensures that their personal information is safe.
3) Reduced Labor Requirements
Retailers have traditionally relied on huge warehouses to stock goods. However, this is increasingly seen as a cost company can no longer bear. They can’t afford to have an army of floor workers wandering the facility looking for items to fill deliveries. They can’t afford to maintain massive warehouses when technology may allow them to reduce inventory levels without hurting delivery metrics.
The solution is the Internet of Things connecting everything in the warehouse into a collective network. Staffers know exactly where to go to find the item they need to fill the order. They can locate items that were misplaced and put them back. In some cases, the computer can give employees the shortest, fastest route necessary to fill their order, saving everyone time. A few warehouses are setting up self-driving carts that can replace most of these staff.
The factory itself can monitor inventory levels, tracking items as they are used to fill orders. When inventory levels hit a set point, the system automatically re-orders more to prevent a shortage. And they track inventory levels as items are restocked.
One major ecommerce firm is using Wi-Fi robots to scan QR codes to track and triage orders since IoT sensors create a faster and more accurate inventory than humans.
4) Enabling Mass Customization
The IoT is key to delivering mass customization at a reasonable price. For example, the system can offer unique, exclusive and personalized ads and discounts to customers. The IoT can also help staff locate and assemble items to create the customized final product the customer has requested.
A related application is the increasing practice of stores filling customer orders placed through an app or online ordering system – fill their grocery order or other order and have it ready for them by the time they arrive.
This is a growing area that businesses need to learn how to serve, and a new breed of supply chain managers who have a great understanding of how to use these new tools will be needed. Schools are listening too. For example, institutions like Kettering University offer a masters in supply chain management that you can take completely online, which teaches you how to work within complex logistical networks and manage customer relationships.
5) Improved Performance of Assets
The health of machinery is vital for any supply chain, and equipment that is down will eventually lead to delays and inefficiencies. The IoT is already being used to track production system performance and predict when equipment needs maintenance. Retailers can use the same technology to track their fleets in transit and determine when they need to repair a truck before it is stranded on the side of the road.
You can determine when a refrigeration unit needs to be repaired before the product goes bad, and recognize when issues with scanners and robots are starting to occur. This allows you to schedule maintenance and prevent costly unplanned failures. This is aside from the asset tracking that allows you to know where forklifts, company laptops, and scanners are at any time.
The Internet of Things is affecting app development and the power grid. However, the greatest impact is on the flow of products from the shop floor to the retail floor to the customer’s door.