IoT Makes the Supply Chain Responsive

Today’s supply chain needs to be responsive to consumers’ ever-changing needs. This is where the Internet of Things (IoT) comes into play.

Today’s consumers are demanding in terms of when, where, and how products and services are made available to them. So, the supply chain needs to be responsive and have the ability to seamlessly trigger actions and responses. This is where the Internet of Things (IoT) comes into play.

In terms of its transformational capability, IoT has great potential within the supply chain. The technology’s inherent decide and response mechanism allows supply chains to better understand what is going on and respond appropriately. IoT provides companies with a granular, real-time, and accurate data source about its customers and potential customers. With a reliable data source, companies can develop smarter, more agile supply chains.

Smarter supply chains

Most current enterprise resource management (ERP) systems are built around optimizing a distinct and discrete function. While these systems may optimize a local function or a local capability, not being connected to the entire supply chain can have adverse effects, such as a lack of enterprise-wide decision making. 

What IoT is doing, and will continue to do, is shining a light on these deficiencies. It will also encourage each party to connect their systems both upstream and downstream in order to optimize the supply chain and gain maximum visibility. This increased visibility will result in supply chains that can respond to changes in consumer demand in real time. 

Savvy data management

The expanded use of IoT within the supply chain means an increase in data, which consequently means that the landscape of potentially actionable information is going to get really noisy. Professionals are going to need to be able to understand the data they receive and be able to discriminate between the noise and the true signals that need to be acted upon and to push the next activity in the chain.

In addition, the data management team needs to be savvy and have the ability to leverage and act upon the data and analytics they receive. Professionals using the data coming in from IoT sources are going to have to be more proficient than they are today in their understanding and usage of information. IoT will also drive decision making speed and create a supply chain where response times will shrink.

Budding technologies

Some IoT technologies are currently being used in a point of commerce environment and showing some good results. Smart shelves and smart scales are communicating with the replenishment process to automate the demand visibility as well as the replenishment process. These technologies understand how much product is on the shelf at any given time and alert staff to potential out-of-stock situations so they can be acted upon in real time. 

Another technology that has tremendous potential is high-precision  radio frequency identification (RFID). With about 65% percent of inventory data being accurate, using high precision RFID ensures 100 percent data accuracy. This results in increased on-shelf availability and reduced excess inventory. In addition, RFID has the potential of reducing inventory shrink by 50%.

While the applications of IoT are great, cost per unit and powering devices have be deterrents to wide-spread usage of IoT. However, with the improvements in battery technology, wireless capabilities, and decreasing cost of these devices those impediments are quickly falling away. Once they do, we can look forward to smarter supply chains that can respond to consumer demand in real-time.

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