A supply chain (SC) is a network of suppliers, factories, warehouses, distribution centers, retailers, and customers, through which raw materials are collected, transformed, produced, and delivered to the customers. As the supply chain is a complex network, supply chain operation’s effectiveness and efficiency depend upon the fast movement of information flow and material flow. With the advancement of the Internet, IoT in supply chain has played a significant role in the integration and sharing of information

But as information flow does not always sync with material flows, a gap still persists in supply chain flow. Consequently, it becomes impossible to capture a supply chain execution on a real-time basis. 

Related post – What is Supply chain analytics?

As the Internet of Things (IoT) is the next-generation internet technology, and able to collect information automatically using sensors, can do real-time processing, and has a feature of ubiquitous computing, it can close the gap between information and material flow. Basically, IoT will bring revolution in SCM 2 in all perspectives of the supply chain process. The below image represents the brief impacts of IoT in Supply chain management areas.

The manufacturing process’s automation to improved visibility within the warehouse will play a significant role in SCM 2.0. Cisco estimates that 50 billion objects will be connected to the Internet by 2020, producing a massive volume and data variety at unprecedented velocity. We can see the several SCM and IoT areas’ influences on those areas with the below graph.

The journey of a Product in IoT Enabled Supply Chain    

We can analyze the impact of IoT in supply chain with respect to a product view and its flow with a supply chain system. IoT can improve in the following areas – 

Forecasting

IoT enables the most realistic and accurate numbers for forecasting the Quantity of products to be purchased for the next purchase cycle. 

IoT Enables:

• POS Terminals  transmit sales pattern and figures 
• Weather/climatic condition is captured by temperature and humidity sensors. 
• Customer browsing history for products is monitored through web portals and mobile applications
• Promotional events on other brands/substitute products are transmitted by POS terminals / vending machines 

Order Management

Consolidating all channels’ inventory requirements and having a global inventory view is really simple if the inventory talks. 

IoT Enables:

• The same stock of beer fulfills customer orders from multiple channels in the warehouse, which has RFID tags on each beer bottle and sensors on each shelf. This provides real-time visibility and tracking of stock in hand.
• As the stock quantity comes down to re-order levels, sensors installed on the shelves generate a DC fulfillment demand.
• In-transit inventory is visible with sensors and GPS installed in trailers, enabling a real-time soft allocation of in-transit stock.

Updated demand quantities are converted to automated POs that enables on-time stock receipt 

Replenishment

Self Replenishing Stock

Smart shelves and talking inventory can replenish themselves. They don’t need manual or systematic support to do so!

IoT Enables:

• A warehouse can store the required amount of products
• Each product has an RFID tag, and each shelf has a sensor or beacon
• When the last product out of the shelf, its sensor triggers a replenishment trigger/message to the DC operator or automation system
• DC operator or automation MHE receives this message and replenishes the shelf (similarly vending machines, store shelves, pick faces to use IoT for automated Replenishment)
• Once warehouse level stock reduces to re-order point, an automated PO is generated to the vendor for fulfillment. 

Warehousing

Omni Warehouse

Every product must know where it has to go in a warehouse. 

IoT Enables:

• The product is received in a warehouse and scanned on the RF gun or automation MHE
• Tag installed on the product guides the MHE or operator to dedicated storage locations
• Sensors / RFID receivers on smart shelves can maintain a live count of the stock, thus eliminating the need for cycle counting
• Temperature sensors and cameras in smart shelves transmit the stock condition to respective systems
• Sortation systems will sort the product to respective customer/store order after sensing the order requirement 

Transportation

Transportation at its Best

In-transit stock temperature readings can save the perishable stocks from getting damaged 

IoT Enables:

• Stock status: Cameras installed in trailers can transmit a live feed of the stock status 
• Temperature: Temperature sensors can monitor the expected degrees 
• Location: Cloud GPS will broadcast live positioning of the trailer 
• Weight: Weight sensors will measure and transmit the catch weight of the stock 
• Time to arrival: Based on traffic and weather conditions

By allowing devices to communicate with each other in the right way, IoT can help supply chain professionals:

·        Inventory management: With the change in the market conditions, demand also changes across multiple channels. With the help of IoT, a company will be able to instantly use data from the IoT to know the position of all parts and products in the supply chain. This will helps to expedite the products which are available straight to the customer. 

·        Transportation: With the help of IoT, we can track delivery routes, transporting speed, storage temperature maintenance, and setting alerts based on that. Ultimately we can get low fuel costs, reducing expenditure, reducing the possibility of theft and loss risks and accurate lead time, etc.

·        The Warehouse Floor: Warehouse equipment Outfitted with sensors will self-monitor, coordinate with one another, and broadcast their status across the network. This means real-time insight into production delays even before they happen. This allows retailers to reroute shipments or to pull inventory from other locations to satisfy customers regardless of where they are. 

·        Data Hub: The IoT will increase not only the volume of data but also the accuracy of data, which can be used to derive valuable insights, using analytical tools, to drive a better supply chain. 

The landscape of IoT in Supply Chain Ecosystem

Astute Forecasting

• Demand Forecasting 
• Real-time demand sensing based on 
• Changes in Weather patterns 
• Changes / Fluctuations in demand pattern
• Real-time Integrated Forecasting from Consumer à to à Retail Channels à Manufacturers 
• Integrated devices from shelves to production factory 
• Integration and Forecasting based on demand irrespective of channels
• Vending Machines forecasting based on the stock activity
• Forecasting Strategy and planning 

Automatic Replenishment 

Real-time Replenishment feeds from Stores / Channels based on different devices such as Camera / RFIDs 

• Sales Trends 

• Inventory across channels 

• In Transit 

• On Order 

Real-time update from Manufacturer à Retailer on 

• Production Lead time

• Delivery lead time 

• Next PO Schedule based on the Availability 

• Delivery Updates in terms of time and Quantity

Real-Time Allocation to stores based on real-time sales trends and inventory (on Shelf, In transit, and On order)

Ingenious order Management Informs retailers with the knowledge of which goods are selling the best and which brands are popular, giving them a clear competitive advantage.

Retailer orders are delivered directly into their distributor’s order management system.

Retailers can know when they are running low, can estimate when they could run out based on current velocity, know how much back up they have of a particular product, and when they need to re-order. Retailers know what is available in their distributor’s inventory.

Real-time visibility: 

• Real-time visibility of anything in the supply chain process can be achieved with sensors continuously by capturing and transmitting data from the warehouse floor. 
• Whether a faulty conveyor belt hampers a pick-and-pack process.
• How long before a forklift requires maintenance.
• Where specific products originated from and where their destinations lie
• How much time drivers spend for loading activity, what could be the most effective route to reduce time, and whether improvements could be made to how goods flow throughout the warehouse.

Talking Inventory: 

• Inventory disorder can happen in case of manual data collection 
• In the IoT connected warehouse, such issues are eliminated since inventory knows where it will go. 
• Sensors also effectively capture the human element, which leads to 100 percent inventory accuracy.

Forklift Safety: 

• The IoT turns a forklift into an intelligent vehicle that is equipped with automatic signal service. This transmits detailed information in the event of an impact.
• A sensor-based monitoring system improves the overall logistics system by keeping a close track of the entire fleet, which effectively reduces the number of forklift accidents.

Productivity: 

• Productivity is closely related to real-time visibility.
• With a clear view of the warehouse, activities help to increase overall productivities. 

Final verdict

We have discussed that with IoT application, we can get scope the full benefit of the supply chain from warehouse management to the logistics, from operations and retail to post-sales data capture. However, security implications arise due to the lack of communications standards between different IoT devices. Perhaps the biggest challenge lies further when machine intelligence and machine learning-driven cyber-physical systems become the norm.