In the race to outperform the competition, executives increasingly look to technology to provide a competitive edge. At the forefront is the Internet of Things (IoT).
This game-changer presents immense promise for improving the entire supply chain.
The impact of IoT on several business sectors and how companies operate has been significant. It integrates the physical and digital worlds, making our world more intelligent and responsive than ever.
One of its most significant effects is in supply chain management and inventory tracking, where it not only cuts costs and time but also opens the way for a robust inventory management system.
But first, let's define IoT before we discuss how it is changing different supply chain components.
IoT: what is it?
The Internet of Things (IoT)
A vast interconnected network where countless physical objects share information about usage and the environment in which they operate. These objects are equipped with sensors and software.
The sensors constantly transmit information about the devices' operational status through the network, enabling an exchange of real-time data without involving a human.
The process of "connecting any device with an on/off switch to the Internet as well as other devices," as defined by Forbes, is known as the "Internet of Things." The fast-growing network of devices includes almost anything you can think of, such as phones, headphones, wearable technology, lights, and more.
Companies are increasingly using IoT devices to boost supply chain visibility. IoT devices' sensors track and report various critical environmental factors, including location, temperature, light, humidity, movement, and handling speed. They might also monitor how products are stored, helping companies maintain quality control along their supply chains.
How IoT improves inventory management
IoT technology can revolutionize production, inventory management, and preventive maintenance visibility in warehouses and retail settings. The cost of a single warehouse error may be high, resulting in unnecessary expenses and additional labor to fix the mistake.
IoT devices can help to increase processing speeds and overall warehouse efficiency while reducing human labor and error rates. Companies are installing IoT sensors in their warehouses to track the movement and use of supplies and other assets. In contrast, shelf sensors transmit real-time inventory information directly to the management system.
IoT and intelligent warehouse management help eliminate expensive and time-consuming errors by accurately identifying inventory levels and equipment placements.
Through continuous monitoring, companies can mitigate risks and maximize operational effectiveness.
Enterprise resource planning (ERP) systems use sensors to detect inventory levels and reorder points to avoid stockouts and overstocking.
They also track orders and purchase orders across various sites.
By forecasting demand and organizing production and delivery, ERP systems can assist in overcoming some of the most challenging inventory management challenges.
IoT and RFID for smart inventory control
With an inventory management system that uses IoT and RFID (Radio-frequency Identification) technologies, every inventory item has an attached RFID tag. Each inventory item's model, batch number, and other relevant information is encoded digitally in the tag's unique identification number (UID).
RFID readers scan these tags and collect data on the tags' IDs, then send this information to the cloud for processing.
Based on the reader's location and the precise instant of the data recording, the cloud retrieves the object's location with the matching ID, generates a visual output of the results, and displays real-time modifications.
Making your warehouse “smart”
Smart warehouses have become a key strategy for companies seeking a competitive edge. Consider retail giants like Amazon, Best Buy, Walmart, and others.
Some companies use cutting-edge tools like live dashboards and smart shelves to manage and maintain real-time inventory. These advanced technologies ensure that top-selling items are always in stock and readily available to meet changing seasonal demand.
These goods are frequently marked with a barcode or an RFID tag so the linked systems can scan and identify them. Throughout the supply chain process, every item touched by IoT is tracked and recorded on inventory management systems.
ID numbers make tracking labeled items easy, allowing you to immediately determine if they are coming in from vendors or going out to customers. The process streamlines manufacturing operations and enhances order fulfillment and customer service.
Companies are increasingly looking to the cloud to acquire intel from this new option. Cloud-based inventory systems are gaining popularity, enabling inventory management systems to give businesses better insight into inventory levels, item locations, expected demand, expiration dates, and other factors.
5 Ways IoT improves global inventory management systems:
Real-time support for effective supply chains - IoT devices enables touchless data collection, such as Radio Frequency ID (RFID) chips, smart devices, and mobile sensors to track and verify packages and shipments. This provides real-time inventory visibility.
Warehouse administration - Improvements in 5G wireless technology and IoT-enabled devices improve warehouse management logistics, optimizing the best possible use of available space and storing frequently used items near entry points.
Algorithms for artificial intelligence - Intelligent algorithms track and manage inventory far more effectively than a human could. By carefully examining IoT data, AI technologies enable better decision-making in inventory management and handling tasks like ordering replacement inventory.
Precise location tracking and enhanced inventory tracking - IoT-enabled products help with more effective storage, distribution, and location tracking. Teams can identify transit delays, allowing for proactive planning for emergencies and finding supply chain alternatives.
Improved Lead Management - IoT-based inventory management estimates the lead times necessary to assemble all production-related elements, minimizing disruptions by detecting high lead times. The result is enhanced coordination between manufacturing processes and inventory demand.
IoT's Advantages for inventory management
Inventory management powered by IoT offers a strong foundation for digitizing industrial ecosystems. IoT in inventory management has several additional process and financial advantages, including:
Automated inventory reporting and tracking - Thanks to RFID and IoT, inventory managers can eliminate time spent on manual tracking and reporting. Every object is automatically recorded and stored in a data warehouse, reducing the possibility of human error.
Always know the quantity, location, and movement of inventory items - An IoT-based inventory management solution provides real-time item status, location, and movement updates. Manufacturers gain clear visibility into the flow of raw materials and components, work-in-process, and finished goods, allowing them to track when items enter or leave specific locations.
Inventory control - With real-time information on inventory quantities and location information, manufacturers can optimize their stock levels while still meeting customers' demands.
Locating operational obstacles - Real-time inventory information helps manufacturers pinpoint equipment with low utilization rates and identify production process bottlenecks. For instance, a build-up of inventory in front of equipment may indicate the need for maintenance or process improvement.
Reduce lead times - By providing inventory managers with information on available inventory and demand estimates generated by machine learning, IoT-based solutions enable manufacturers to reduce lead times.
For instance, in just ten days, Zara employed an RFID-based inventory management system to get a garment from design to a smart warehouse.
By embracing these benefits, producers can balance their inventory levels, use their machines better, shorten their lead times, and avoid hidden expenses associated with manual processes.
For businesses adopting the technology, an IoT-based inventory management system offers several advantages, including RFID for accurate inventory monitoring, real-time communication, touchless data collection, and intelligent warehouse management with drones and robots.
IoT Inventory Management keeps improving and offers possibilities for development despite concerns or problems with IoT deployment, such as cost, security, and scalability. This approach to supply chain management is increasingly emerging as productive and economical.
This technology has several benefits and readily accessible industrial solutions that can aid businesses in maintaining their competitiveness. Take advantage of this opportunity to solve your inventory management issues once and for all.
Ready to embrace smart manufacturing?
At Ideas to Solution, our expert consultants know all the right questions to ask to integrate IoT into your operations and streamline your processes.
We'll assist you with analysis, action, and optimization to ensure your IoT success and provide all the necessary support you need beyond the launch.
Contact us for a complimentary consultation on your business needs, and we'll set you on the right track for your organization's shift to smart inventory management – and your future success.
Related reading
Interested in learning more about smart manufacturing technology? Read our last blog, "An Introduction to Industry 4.0 – And What it Means for Manufacturers."
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