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The Internet of Things in Supply Chain: What is the Impact of the IoT on Supply Chain Management?

The Internet of Things (IoT) is among the greatest innovations to ever occur in modernity. At its fundamental level, the IoT exists as computer systems share information between one another through the internet. Meanwhile, the power of the IoT has grown increasingly complex as everyday households are using products, like smart appliances and energy systems, much like the Nest thermostats, to improve efficiency and productivity. In manufacturing and trade, the IoT has the potential to change much more than just operating costs, explains Kathleen McMaster of GlobalTrade magazine, and you need to understand its three, primary impacts on the internet of things in supply chain management.

1. Asset Tracking Through the IoT Will Improve Operations

Asset tracking can include products, fleet vehicles, equipment and machinery, people and packaging in the supply chain, and the IoT is revolutionizing this concept. By bringing systems online through the IoT, companies can quickly gain a 360-degree view into all operations. This can isolate possible issues, like faulty equipment or damaged products, automatically. As a result, automated systems can activate other processes and activities to ensure all orders and needs are met.

For example, delays due to weather during shipping might trigger a second shipment to go to customers, while recalling the original shipment to the warehouse afterward. In addition, this will improve visibility to consumers, promoting a better, positive customer experience, reports Brian Ray of Link Labs.

2. The IoT Promotes Better Product Cycles and Flow

Part of the benefit of the IoT in trade revolves around its use to manage product cycles and ensure a continued flow of products. Vendors, business-to-business (B2B) partners, manufacturers, and customers contribute data to analytics systems that create proactive, not reactive forecasts. As a result, issues arising from understocking or overstocking can be reduced, optimizing the warehouse and ensuring customers and everyone in the process has access to the products and services they need now, explains John Westerveld of the 21st Century Supply Chain Blog.

In the reverse logistics supply chain, such as managing returns and damaged products, the IoT can be leveraged to identify issues in manufacturing or trends in the market regarding buyer’s remorse. Essentially, companies can figure out what is and is not going wrong faster.

3. The Internet of Things in Supply Chain Is Essential to Automation

Automation is the undisputed buzzword across the global supply chain. Systems that are automated can eliminate safety risks and labor costs, and automation can give companies access to an inexhaustible resource for handling orders through robotics, self-driving trucks and cars, and drones. With more customers ordering more products, the demand for automation increased exponentially, and all manufacturers and supply chain partners have taken notice.

Automation has other direct benefits, like ensuring companies can meet possible issues with the capacity crunch or driver shortage. It can reduce shipping costs and bring delivery windows to near-impossible feats. Meanwhile, automation and the internet of things in supply chain can be leveraged to isolate malware and enhance cyber security in increasingly large organizations.

The Big Picture

It is reasonable to assume the IoT will soon become the central force behind all supply chain management processes. It is growing in scope by the minute, and by some reports, there could be up to 50 billion new IoT-enabled devices within the next three years. Furthermore, the value of the IoT is expected to exceed $20 billion by 2020, asserts Andrew Meola of Business Insider. Therefore, its impact on SCM could go much further than anyone or anything, including this article, predicts.