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How to Use the IoT to Optimize the Supply Chain

EmilyNewton
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Supply chain optimization managed by Internet of Things

Supply chain management can be a daunting responsibility. However, the connectivity offered by the Internet of Things (IoT) brings enhancements for everyone involved. Thus, it becomes easier to notice problems faster and respond promptly to effectively mitigate their impacts.

Here are some thought-provoking ways you might rely on the IoT to create a stronger supply chain.

Monitor Goods During Global Journeys

Modern supply chains are significantly more complex compared to the ones of past eras. That’s primarily because goods travel longer distances now. Instead of travelling between counties or states, product journeys span over various countries and continents.

Additionally, these more extensive trips require a higher number of supply chain partners. In theory, that means more things could go wrong as products pass through the hands of more parties that assume brief responsibility for them.

However, the IoT removes and reduces risks associated with having a global supply chain. For example, a connected sensor could confirm where things go wrong during a parcel’s trip and what happened. It then becomes easier to break down how to take corrective action. For example, was the problem due to mishandling by one person, or does the company have a history of making errors?

Increase Supply Chain Resiliency

The COVID-19 pandemic provided a harsh reminder that many supply chains were not as shockproof as people thought. Shoppers often encountered empty shelves, while the suppliers dealing with shortages often dealt with delays that exacerbated product outages.

Issues can also happen if supply chain parties suffer equipment breakdowns that cause substantial disruptions. IoT sensors used for predictive maintenance can tell users when to schedule appointments with technicians to take proactive measures before machine failure occurs.

Those sensors can also warn of user errors. Perhaps a person accidentally leaves the door open on a refrigerated case. A sensor could trigger an alarm before the mistake leads to product loss.

As the IoT helps supply chain professionals take more internal measures to safeguard their supply chains, they may be compelled to examine possible weaknesses with external partners. For example, if a company has all its suppliers concentrated in one area of the country, that could pose risks. Determining how disasters and other challenges may affect suppliers is a smart move in preventing catastrophes and achieving supply chain optimization.

Facilitate the Restocking of Supplies

Retailers are starting to use IoT shelves that automatically detect when the products displayed on them get too low. Such setups prevent manual stock counting and the need to place orders accordingly.

Another possibility exists for products with internal parts bearing sensors. For example, an IoT printer cartridge might detect when the remaining ink gets below 15%. Then, it could automatically send a reorder request to the necessary supplier.

These examples show how the IoT can keep supply chain operations running smoothly by reducing or eliminating disruptive events. When corrective actions happen before supplies run out, supply chain partners stay well-positioned to keep their customers satisfied.

Improving Aftermarket Services

Supply chain optimization doesn’t end when products reach customers. It can also apply to the instances that happen once people have used the items and need additional services.

The assistance a company provides people with after the associated sales can account for up to 50% total acquisition cost to the customer. When a manufacturer demonstrates responsiveness and an eagerness to help, people are more likely to keep doing business with the company.

In a recent example, tire company Yokohama announced plans to embed sensors into passenger car tires. Brand representatives believe that decision will increase safety and make it easier for customers to get where they need to go without hassles.

The initial trial of the technology includes air-pressure monitoring for car owners. However, the company intends to extend the effort to include treadwear. That could help Yokohama representatives determine whether certain tire models require replacement quicker than others. If so, the company could alert customers to have new tires put on before the existing ones cause problems.

Enhancing Communications Between Suppliers and Buyers

A well-optimized supply chain is one where all involved parties are in the loop about the associated goods. Having those details is especially important in cases where output could vary due to factors largely outside a supplier’s control. For example, a drought could leave a farmer struggling to fulfil orders from the suppliers that depend on them.

Australian dairy brand Bega Cheese recently invested in the IoT as part of a digitization initiative that started several years ago. Intelligent sensors help the company anticipate the output from individual farmers, including milk volume, temperature and quality. Bega Cheese representatives can make adjustments if any of the measurements are not as expected.

Many of the IoT sensors used at factories around the world allow floor managers to see granular details, too. For example, which teams consistently have the highest output? Which machines maintain the most productivity per the number of hours operated each day?

Having access to that data allows company leaders to give accurate estimates when potential or existing buyers make inquiries. For example, maybe a raw materials producer hears from a potential partner that wants the company to fill large orders every month. Examining the data from IoT sensors could make it easier to see if the business can do it or if the buyer should look elsewhere.

IoT Technology Can Make Supply Chain Optimization a Reality

A well-functioning supply chain requires consistent performance from all parties involved. However, surprises can still happen. Fortunately, the IoT makes those unexpected events less likely. For example, a temperature-monitoring sensor can show if perishable goods will be outside the required temperature range for too long. The person who receives that data could contact whoever handles the goods to immediately correct the problem.

Before the IoT provided a tremendous increase in visibility, many supply chain professionals had to do everything they could to prevent problems, then hope that everyone else involved took the correct risk-reduction actions. Now, people can see signs of trouble in real-time, letting them act to keep things on track.

As more companies start applying IoT tech to their supply chains, more possibilities will come to light. However, these use cases highlight why people are so hopeful about what the IoT will do to forever change supply chain optimization.

Emily Newton is the Editor-in-Chief of Revolutionized Magazine. She has over three years experience writing articles for the tech and industrial sectors. Subscribe to the Revolutionized newsletter for more content from Emily at https://revolutionized.com/subscribe/

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