IoT in Supply Chain Management: Uses and Examples

Summary

In the dynamic logistics landscape, supply chain management can become a complex matter. Meeting growing customer demands and optimizing costs while taking care of the movement of assets and their safety requires the implementation of new technologies to maintain operational efficiency.
 
Integrating the Internet of Things technology into logistics and supply chain management has brought a transformative shift to the industry, particularly in real-time tracking and tracing, inventory management, warehouse operations, predictive maintenance, route optimization, and other areas.
In this article, we look at how implementing IoT-based logistics software solutions can boost performance and streamline supply chain management.

An overview of IoT in logistics software

The Internet of Things is a network of interconnected physical devices that collect data and exchange it with each other or send it for storage and analysis via the internet. 
 
In the logistics industry, IoT involves a myriad of physical objects, ranging from vehicles and warehouse equipment to packages and containers equipped with IoT sensors. Based on their type, these devices can capture valuable supply chain metrics, like temperature, location, or condition of goods.
 
The latest industry reports prove that IoT adoption in logistics can reach unprecedented heights in the next few years. According to Future Market Insights, the IoT spend in logistics is projected to reach US $114.7 billion by 2032 at a CAGR of 11.2% from 2022 to 2032.

Five key uses for IoT in logistics 

Below, we explore some key use cases of IoT that show how it addresses specific challenges and optimizes complex operations in the logistics industry.

Real-time asset tracking
One of the primary applications of IoT in logistics is the real-time tracking and monitoring of assets. It involves using IoT-enabled devices equipped with GPS technology and other sensory technologies to collect real-time data on the conditions of shipments and packages, as well as their location and movement.
 
Examples of IoT-enabled devices used in logistics for asset tracking include radio frequency identification (RFID) tags, GPS trackers, wireless temperature sensors, smart refrigeration units, and many more. By integrating these devices into vehicles, containers, and warehouses, businesses get unparalleled visibility into the movement of their shipments. 
 
One of the real-life examples of utilizing IoT-powered tracking devices in supply chain management is SenseAware, a tracking system developed by FedEx. The system allows customers to monitor the condition of their packages from origin to destination and receive real-time updates on their route and location.

Predictive maintenance
Sensors embedded into vehicles and warehouse equipment collect the full spectrum of real-time data about their condition. This data is further processed by advanced analytical algorithms, which identify particular patterns, e.g., temperature fluctuations, deviations in fuel consumption rates, or geospatial patterns of vehicles, and predict potential failures.

These IoT-generated insights enable logistics managers to identify and address potential issues before they escalate, while business owners can use them to develop proactive maintenance strategies. As a result, the application of IoT devices and advanced analytics helps minimize unplanned downtime, reduce operational costs, and optimize maintenance schedules.

DHL uses IoT sensors to monitor the health and performance of its fleet. By incorporating IoT sensors into vehicles, the company’s operators receive data that allows them to predict when components or systems in their fleet should be checked for maintenance. It helps managers make timely interventions, prevent unexpected breakdowns, and decrease maintenance costs.

Cold chain management
IoT-enabled сold chain management involves sensors with temperature monitoring capabilities that track the conditions of temperature-sensitive goods, such as pharmaceuticals and food. 
 
Any deviation from the normal temperature range triggers automated alerts to fleet managers or drivers, warning them about the need to check on the condition of packages. Utilizing such sensors is critical for maintaining product integrity throughout the supply chain and preventing the spoilage of perishable products.
 
A real-life example of implementing IoT solutions for cold chain monitoring is the Remote Container Management (RCM) system Captain Peter piloted by Maersk, the world's largest shipping company. The company equipped its refrigerated reefer containers with advanced IoT sensors tracking temperature, humidity, and other parameters that can lead to the products' spoilage in real time.

Warehouse and inventory management
Logistics companies can implement IoT-enabled technologies in warehouses and storage facilities to streamline various processes and automate inventory management. IoT devices can continuously monitor the movement of goods and stock levels and provide real-time insights into the condition of equipment, containers, and packages.
 
These devices include wearables, sensors, barcode readers, and automatic equipment like RFID trackers, each useful for particular tasks. For example, placing RFID tags on packages shelved in warehouses allows tracking goods' location and inventory levels in real-time. Warehouses can also be equipped with smart shelves that provide real-time visibility into inventory levels by transmitting data on the weight and pressure on shelf surfaces to a warehouse management solution system.
 
By analyzing IoT-generated warehouse and inventory management data, companies can make more accurate product demand forecasts and optimize stock levels and inventory costs.
 
Amazon implemented an IoT-based warehouse management system in its fulfillment centers to track the movement of packages and automate inventory flow. IoT sensors and trackers employed by the ecommerce giant help optimize order fulfillment processes and streamline order processing and delivery.

Fleet management
IoT technology can drastically enhance fleet management by helping monitor driving patterns, track vehicles’ condition and location, and optimize route planning.
 
Smart fleet management solutions rely on IoT sensors integrated into individual vehicles that collect data on specific parameters in real time. These parameters can include fuel consumption, tire pressure, engine health, vehicle location, and driver behavior. If some inefficiency or issue is detected, smart sensors will send an alert to a driver or fleet manager.
 
Real-time information about fleet performance and drivers' physical and psychological condition helps managers control deviations in the vehicles' speed and mechanical health and take immediate actions to address these issues, preventing breakdowns and accidents.
 
A notable example of IoT implementation for fleet management is a vehicle telematics solution at a logistics giant UPS. The company's system collects a wide range of data via GPS, IoT sensors, and vehicle engine diagnostics and sends it to fleet managers and logistics operators. Equipping trucks with IoT sensors helps UPS minimize fuel consumption, quickly address maintenance needs, and improve overall efficiency.

Final thoughts

With the advent of IoT, logistics software has evolved into a strategic asset that can reshape traditional logistics operations and transform the way companies navigate the complexities of modern supply chain management.
 
As businesses recognize the pivotal role of advanced technologies in logistics, integrating IoT devices into the supply chain becomes paramount for enterprises that want to retain a competitive advantage in the industry. The future of IoT is promising, and companies that embrace the opportunities opened up by the technology are very likely to see outstanding business results.