The Internet of Things (IoT) is a term used to describe the interconnected network of physical devices, vehicles, and other objects that are embedded with sensors, software, and network connectivity. These devices collect and exchange data with one another, allowing for real-time tracking, monitoring, and analysis. This empowers a wide variety of industries to improve their operations on a daily basis, but it took time for IoT to take root and grow into its fully-realized potential. One such use occurs within the supply chain, where IoT devices play a significant role in improving productivity, efficiency, and profitability. But where did supply chain IoT get its start, and how did it get to where it is today?
Early Usage of IoT Devices in Supply Chain
The earliest stages of IoT in supply chains can be traced back to the development of Radio Frequency Identification (RFID) technology. RFID tags were popularized and heavily relied on to track products in supply chains in the early 2000s, with the goal of reducing inventory levels and improving supply chain visibility. RFID technology was considered a breakthrough at the time, allowing for the automation of inventory management processes and more accurate tracking of products. Previously, operators were forced to rely on physical documentation or, if they were lucky, shared spreadsheets or company databases. Others even used barcode tracking, which – while a form of tracking enabled by technology – is not usually regarded as an IoT strategy. Barcode scanning relies on close-range, hand-held scanners to inform visibility, and its functions are quite limited and inconsistent when compared to RFID. The fallibility of these pre-IoT strategies is what led to the widespread adoption of RFID, which provided a quicker, far more reliable system for keeping track of product levels and location.
However, as with all technology, development could hardly stop there. While RFID was a strong and effective start for supply chain technology, there were limitations to its effectiveness. For example, RFID systems were expensive to implement and maintain, and they could only be used for certain types of products. They also tended to fall short in terms of data accuracy, interoperability, and compatibility with legacy systems, leaving many companies wondering if there was a more effective alternative that better suited their specific needs. After all, while these systems were being used to monitor the transportation of goods, they could not help companies retain visibility when the goods were lost or if they showed up somewhere unexpected. RFID is, essentially, only as good as your ability to ensure that your goods are reliably transported. It cannot, in this form, lend itself to better visibility on the road.
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Advancements in IoT Technology for Supply Chain Management
Because technology is wont to change, RFID tracking evolved alongside forms of real-time location tracking and data analytics, continuing to change the landscape of supply chain visibility technology. Active RFID found its footing, with this technology allowing for the improved identification and tracking of goods and assets in real-time, automating the process of supply chain management in a way that its passive predecessor could only partially achieve.
Other forms of real-time location tracking also began to provide greater insight into the movement of goods. The evolution of RFID technology has also led to the development of more advanced tracking and monitoring systems. In two such developments, the use of sensors and GPS technologies has significantly improved tracking and monitoring capabilities in supply chains. For example, sensors can be used to track temperature, humidity, and other environmental factors, allowing for the monitoring of perishable goods such as food and medicine. GPS technologies can be used to track the location of shipments in real time, providing businesses with the ability to optimize routes and reduce transportation costs.
These technologies account for the weaknesses of manual tracking systems, barcodes, and even passive RFID. They truly enable full visibility of your supply chain logistics process without relying on the need for manual scanning or short-range tracking to provide some idea of where an asset is located. Instead, popular GPS technologies – as well as cellular tracking systems and other variations conceptualized thereof – allow companies to see exactly where their assets are located when they’re on the road between point A and point B, even providing the tools necessary to locate them if they don’t stick to the planned course and go missing.
Beyond the improved ability to provide complete real-time visibility, IoT for supply chain management has also evolved in terms of data analytics capabilities. Our ability to visualize data and extrapolate information from that data has improved greatly over the years. Modern tracking systems can be used not only to maintain visibility of your supply chain, but also to help you make decisions based on historic data and projections for the future.
Benefits of IoT in Supply Chain
The implementation of IoT in supply chains has brought numerous benefits to the industry, including improved supply chain efficiency, enhanced visibility, increased customer satisfaction, reduced costs, improved risk management, and improved decision-making. With IoT, supply chain managers can track the location and status of goods in real time, enabling faster response times and more accurate inventory management. Improved supply chain visibility allows for greater control and optimization of the entire supply chain, reducing the risk of disruptions and delays and creating a better process for logistics and supply chain management overall.
Improving Supply Chain Efficiency
One of the most significant benefits of IoT in the supply chain is the ability to improve efficiency. With IoT, supply chain managers can monitor operations in real time in order to identify issues before they become problems. This information can then be applied to optimize performance. For instance, IoT-enabled predictive maintenance can help reduce downtime by detecting potential problems early, preventing equipment failure and costly repairs. IoT-powered inventory management also ensures that stock levels are maintained at optimal levels, reducing waste and eliminating stockouts. Asset tracking, enabled by IoT sensors and RFID tags, allows supply chain managers to track equipment and goods throughout the entire supply chain, increasing visibility and reducing the risk of loss or theft across the entire process.
Enhancing Visibility
IoT can also enhance supply chain visibility, providing end-to-end visibility from the very beginning to the very end. Real-time tracking of goods enables supply chain managers to monitor the progress of goods throughout the supply chain, ensuring that they arrive on time and in good condition. The resulting improvement in forecasting and demand planning allows organizations to make decisions that can reduce lead times, minimize stockouts and overstocking, and improve overall supply chain performance.
Increasing Customer Satisfaction
As previously mentioned, IoT can help improve quality control. In ensuring the quality of a product – and ensuring that said quality is not diminished over the course of the transportation process – companies can improve the experience of their customers. This not only lessens the need for costly returns and replacements, but it helps a brand maintain a sense of integrity and good reputation that will make customers far less likely to take their business elsewhere. In the case of companies where it is relevant, IoT can also improve customer satisfaction by providing a personalized experience, faster response times, and accurate delivery information. They can even receive accurate, real-time updates on the status of their orders. We usually think of this as a benefit to direct consumers, but it is even more helpful when a logistics company’s customer is another business, such as a manufacturing plant or retail store, as it empowers them to make improved decisions as well.
Reducing Costs
As all good supply chain solutions should, IoT can help reduce costs by enabling the efficient use of resources, optimizing transportation routes, reducing inventory costs, and lowering maintenance costs. As discussed prior, one of the advantages of IoT-powered predictive maintenance is that equipment and machinery can be maintained only when necessary, which drives down costs accrued from repairs and replacements. Beyond this, IoT-enabled optimization of transportation routes can help reduce transportation costs, while IoT-powered inventory management can reduce the costs associated with overstocking and stockouts.
Mitigating Risks
IoT can help mitigate risks by improving risk management, especially those risks regarding supply chain security, fraud and theft, and regulatory compliance. In terms of security and theft prevention, IoT-enabled asset tracking promotes full visibility of goods throughout the entire supply chain. There is no “blind spot” like the ones that might occur from manual scanning or other forms of tracking – even if a product is not where it is intended to be, it can still be located using the tracking system. Not only does this visibility help reduce theft, but it also gives organizations a chance to recover stolen assets. With regards to complying with regulations and industry standards, IoT asset tracking helps companies reduce the risk of fines and penalties by giving them the sensors and other tools they need to obtain relevant data, such as temperature, humidity, and other pertinent conditions. IoT also aids in supply chain compliance by ensuring that historic operational data can be easily accessed and used to respond to lawsuits and proof of compliance demands in order to avoid fees.
Boosting Innovation
The data provided by IoT-enhanced asset tracking can also be used for purposes beyond proving compliance. It can also provide a strong basis for innovation in the supply chain, enabling data-driven decision making, new business models, enhanced collaboration, and improved product design. Essentially, IoT empowers companies to fully visualize their processes, including strengths, weaknesses, and opportunities for growth based on their current procedures. The resultant data can then be used to better-informed decisions, improving overall supply chain performance.
Improve Your Logistics Processes and Supply Chain Management
The use of IoT technology has revolutionized the supply chain industry since its conception, and there are new innovations being made every single day. With the ability to connect and communicate with a vast array of devices and equipment, IoT is continuously bringing a new level of efficiency and transparency to the supply chain, empowering businesses to reach their full potential. Here at Link Labs, we work with logistics operations to provide full asset visibility for every aspect of their supply chain, enabled by our AirFinder Everywhere asset visibility solution. With this system, you can track your supply chain from point A to point B and through every expected or unexpected detour in between! Book a demo now to learn how we can help you elevate your supply chain to the next level.
