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The Impact of IoT on Inventory Management
5/19/20
Grainger Editorial Staff
The Internet of Things (IoT) is rapidly revolutionizing every aspect of
inventory management and the global supply chain. In a world where new
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technology meets constant innovation, the Internet of Things is helping usher
in the Fourth Industrial Revolution. According to a recent Bain Insights Brief,
business-to-business (B2B) applications of the Internet of Things will
generate $300 billion in revenues by 2020. Additionally, a McKinsey Global
Institute analysis found the IoT’s potential contributions to inventory
management, supply chain management and logistics could reach between
$560 billion and $850 billion per year by 2025.
What Is the IoT?
Forbes de�nes the Internet of Things as the process of "connecting any
device with an on and off switch to the Internet as well as to other devices."
The Internet of Things (IoT) is a growing network of devices including
everything from cellphones, headphones, wearable devices and lamps to just
about any other device you can imagine.
Blume Global reports many companies are now implementing IoT devices to
increase the visibility of their supply chains. IoT devices use sensors to
measure and report on many critical environmental factors including location,
temperature, light, humidity, movement, and handling speed. They can also
monitor the storage conditions of products which helps businesses ensure
quality management throughout their supply chains. IoT technology in
warehouses and retail stores can also improve visibility in production,
inventory management, and predictive maintenance.
IoT and ‘Smart Warehouse’ Management
Warehouse errors can be costly. Inaccurate operations and errors require
more labor to �x, adding unnecessary costs. IoT devices can help reduce
manual labor, errors, and help to increase processing speeds and overall
warehouse e�ciency. Companies are installing IoT sensors in their
warehouses to monitor the movement and use of material and other assets
inside their facilities. Businesses are also using sensors on shelves to
transmit real-time inventory information to their management system. IoT
and smart warehouse management is helping to eliminate expensive and
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time-wasting mistakes by ensuring inventory levels and equipment locations
are clearly known and constantly monitored.
While always critical, the real-time accuracy of inventory has never been more
important. This is largely due to the rise in online shopping. Today’s
consumer expects to point, click and receive their orders within days or
sometimes hours. Today it's essential that consumers have real-time
accurate information of an item’s availability and expected delivery date. This
helps reduce out-of-stock items and improves customer service.
However, the traditional supply chain was not designed to handle a large
volume of small orders for immediate delivery. Whether or not a particular
item is in stock online or in a nearby store not only affects potential sales, it
also can have lasting effects on customer loyalty and a company's
reputation. Manufacturers, retailers, warehouses and logistics providers are
all struggling to adjust to meet these new demands on their supply chains.
Because of these new consumer buying habits, companies are adjusting their
internal processes, sta�ng and technology to meet the needs and
expectations of demanding consumers.
10 Ways IoT Is Impacting Inventory Management
1. Real-time data from IoT devices help create a more streamlined supply
chain.
IoT devices use different technology to aid in touchless data collection. IoT
devices use GPS and other technologies including Radio Frequency ID (RFID)
chips, smart devices and mobile sensors to help track and authenticate
products and shipments. According to Blume Global, the large amount of
data now available from IoT devices, wearables and retailers provides realtime visibility into inventory
2. IoT devices provide precise location monitoring and enhanced
inventory tracking.
According to The Daily Plan IoT, products tagged with IoT devices help
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provide more e�cient storage and distribution.Tracking inventory and route
planning through IoT devices can identify where and when goods are delayed
in transit. This aids in emergency planning and helps identify alternative ways
to speed up the supply chain.
3. RFID and touchless data collection from IoT devices help create errorfree processes and reduce shrinkage.
RFID tags used with IoT devices to keep track of physical inventory can be
the key to inventory management. RFIDs help make inventory management
more e�cient by preventing the need to scan barcodes or labels. Rather than
only keeping track of numbers, businesses can now easily track their
inventory and supply chain in real time. Interconnected IoT devices allow
businesses to monitor the days to the expiration of goods, which is very
useful for preventing spoilage and waste. IoT devices also help protect
against theft and lost products, by helping businesses constantly monitor
their products’ locations.
4. IoT devices help improve logistics and warehouse efficiency.
IoT devices and the growing bandwidth offered by 5G technology are helping
to improve the logistics of warehouse management. Along with the use of
smart shelves and storage bins that communicate stock levels in real time,
IoT devices can help identify usage patterns. This continual feedback helps
streamline coordination between warehouse operations and various logistics
providers.
5. Predictive analytics from IoT devices helps identify potential risks and
enhances performance measurement.
Smart inventory management using IoT devices provides real-time visibility
across warehouse, production and distribution centers. Strengthening legacy
inventory management systems with the quality and data that IoT sensors
and systems can provide helps to lower inventory costs and reduce inventory
management errors. When IoT data is integrated into ERP systems, it helps
improve record-keeping and predictive maintenance, ensuring that the best
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possible data is available for everyday business decisions.
6. IoT devices enhance fleet inventory management.
IoT is very useful if an organization’s inventory includes equipment and
vehicle �eets. Real-time tracking using GPS technology to collect data about
where the equipment or �eet vehicles are located helps keep track of
inventory and prevent loss. Enhanced GPS tracking from IoT devices allows
businesses to capture load discrepancies and notify logistic partners and
consumers in real time. Monitoring the goods during transport also helps
prevent spoilage, theft and unauthorized use.
7. IoT devices help provide better forecasting and more accurate lead
times.
The Daily Plan IOT states using IoT systems to track inventory helps improve
forecasting accuracy. IoT devices help determine the lead times needed to
assemble all the necessary manufacturing parts. Excessive lead times can
then be easily identi�ed to avoid bottlenecks caused by critical parts missing
that can quickly halt production. Businesses are also able to integrate
forecasted weather changes in route schedules to enable better delivery
decisions.
8. IoT, robotics and augmented reality (AR) integrations help improve
processing speeds and efficiency.
To help speed up the storage, handling, and shipping of inventory,
warehouses are relying more on IoT-enabled devices including wearables,
smart glasses, and augmented reality (AR) technology. Robotic and arti�cial
intelligence solutions are also being used in warehouse and logistics
operations along with warehouse workers to improve performance and
reduce errors.
9. IoT devices help reduce loss and equipment damage.
IoT devices are helping to improve inventory management by helping
businesses easily keep track of an item’s precise location. This helps reduce
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the time it takes to �nd inventory. All of the available real-time data helps
provide valuable insights to support strategic and tactical business
decisions.
10. IoT devices help ensure regulatory compliance.
One of the most promising uses for IoT devices is the potential to streamline
traceability and inventory management compliance in highly regulated
manufacturing industries. When the IoT is combined with new blockchain
technology it can help ensure regulatory compliance and chain-of-custody
regulations are being met throughout the supply chain. The growing
integrations of IoT devices, ERP and Inventory Management software are
helping to provide increased supply chain compliance on a global scale.
IoT Challenges and Opportunities
Technology is rapidly powering changes across supply chain networks. An
inventory manager’s greatest challenge happens when there isn’t enough
data available to make an informed decision. Updating legacy inventory
management systems with IoT devices helps improve overall e�ciency by
bringing greater tracking, traceability, quality management and compliance.
In recent years, warehouses have been transforming into critical business
hubs that increase e�ciency and speed across the entire supply chain. Many
organizations have started using IoT devices for inventory management.
However, there are concerns about IoT implementation that must be
considered. Businesses must take into account the investment cost, security,
and scalability of integrating IoT devices within their current inventory
management system.
Despite these concerns, the cost of the IoT technology continues to decrease
as the amount of available IoT integrations for inventory management
continues to advance. For many organizations, IoT devices are rapidly
becoming a cost-effective and e�cient solution for inventory management.
The large amount of real-time data from IoT devices can help organizations
identify opportunities to improve overall logistics, inventory and supply chain
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management.
Learn more about Grainger’s KeepStock Inventory Management Services
The information contained in this article is intended for general information purposes only and is based on
information available as of the initial date of publication. No representation is made that the information or
references are complete or remain current. This article is not a substitute for review of current applicable
government regulations, industry standards, or other standards speci�c to your business and/or activities and
should not be construed as legal advice or opinion. Readers with speci�c questions should refer to the
applicable standards or consult with an attorney.
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