The Impact of Internet of Things (IoT) on Supply Chain

IoT is widely used to help track freight within a supply chain. To learn more about what IoT is, and its impact on supply chain management, read here.

26 May 2021      

As more and more internet connected devices become part of our everyday lives, the more the Internet of Things (or IoT) plays a role in how we live and work. In fact, IoT is already all around us.

When it comes to supply chain management though, the Internet of Things is the holy grail. Being able to track, trace and monitor your supply chain and shipments, in turn allows you to make better business decisions.

But how does it work exactly? What data can be collected? And how much does it cost?

In this blog, we’ll explore the impact of the Internet of Things on supply chain, how it works, the positive benefits and what the future of IoT looks like for freight.

What is IoT (Internet of Things)?

If you want your supply chain to be smarter, faster and more reliable, then the Internet of Things paves the way for you to achieve just that.

It works by using connected devices to collect and report on real-time data.

In the case of freight, the connected device is a battery powered sensor, capable of measuring and reporting on a range of parameters including location, temperature, humidity and shock.

Internet of Things Example

The biggest thing for freight, is knowing where a parcel is at any point in time. This makes one of the most revolutionary elements of IoT for supply chain, the ability to track the location of an individual consignment for its entire journey, and not just at designated “scan” points along a route.

Right now, the industry relies on barcode scanning. Whether the process of scanning the barcode is manual or automated, it comes with many flaws. The barcode could be missed or not scan due to damage or dirt. And you are only able to collect data on the location of the parcel from when it was last scanned.

Enter IoT. A small, battery operated device is placed inside or onto your parcel. The sensor inside the device is setup to track location and pings the GPS location of the parcel back to a central tracking database every 30 seconds.

And you know exactly where your consignment is, every 30 seconds.

IoT and Supply Chain Management

IoT technology already exists within supply chain management today.

But currently, the technology sits within the vehicle, or machinery, instead of in the consignment or parcel.

The future of IoT in supply chain management is about more accurate data.

The Role of IoT in Supply Chains

The role of IoT in supply chains is one of instant and accurate data that allows a business to make critical decisions impacting customer experience and the bottom line.

With IoT you’ll be able to collect data that will allow you to more effectively manage resources and assets, automate functions within your operations, and benefit from the transparency that comes with knowing more about what happens to your shipment as it makes its way from Point A to Point B.

Most importantly, the data will allow you to track more than simply where your consignment is at any given point in time.

Examples of IoT in Supply Chains

There are four key areas where IoT can create significant benefits to your supply chain.

These are location tracking, temperature tracking, measuring impact and measuring humidity or water damage.

Location Tracking
Knowing where your goods are and when they will arrive at their destination allows you to make critical decisions when things don’t go to plan.

This is relevant to a wide range of industries including medical and mining, but particularly when you’re transporting high value or time sensitive goods that need to arrive on time. For example, in publishing, where magazines or newspapers have a shelf-life, delayed arrival or lost goods can have a significant impact on wastage, and therefore the bottom line.

Location tracking using IoT allows you to know how far away your consignment is and whether it might be stuck in transit, giving you the ability to accurately follow up, and implement contingency plans.

This sort of tracking also helps to prevent theft.

Temperature Tracking
Temperature tracking is perfect for goods that need to be kept within a given temperature range.

The medical industry stands to benefit greatly from this type of IoT application. If a medical product needs to be kept between -3 and -8 degrees for example, the sensor can be setup to detect a temperature drop outside the required range, and the receiver will know that the item has perished so they don’t use it.

As time goes on, this type of IoT sensor could also help to mitigate this type of issue from occurring at all, by giving you time to react to a temperature drop, and rectify it before the goods perish.

Measuring shock or impact
If you move anything made of glass (such as solar panels), or anything that has sensitive componentry (such as mining or medical equipment), then the ability to measure shock or impact is valuable on several levels.

The first is being able to know ahead of arrival if a critical piece of equipment has been damaged on route. If a sensor detects potential damage, a backup shipment can be dispatched to avoid unnecessary delays within the work environment.

The second is being able to make insurance claims. If an item is damaged in transit due to shock or impact, the sensor can be calibrated to tell you when and/or where the damage occurred, allowing you to provide accurate information to your insurance company around liability.

Measuring humidity or water damage
Sensors can also be calibrated to measure humidity or the presence of water.

This is useful for perishable goods, where changes in humidity or water damage make the product un-useable on arrival. In particular, being able to get advance warning of this type of damage can have a positive impact on managing levels in the fast-moving consumer goods category.

Impact of IoT on Supply Chain

Internet of Things has the potential to reshape the way you manage your supply chain.

Access to up-to-the-minute, detailed data will allow you to make better decisions, improve efficiency and fix things more quickly when they go wrong. The sooner you can identify a problem in your supply chain, the sooner you can do something about it.

IoT is also something that is becoming a necessity, rather than a nice to have.

On a consumer level, customers are used to being able to track things. If you’re able to see something as simple as where your food is and track its delivery on a map, why can’t you track your freight in the same way?

But as with all new technology, there are advantages and disadvantages when it comes to real-life application.

Advantages of IoT in Supply Chain Management

Improved Data Insights
When you know what’s going on, it’s easier to make smart decisions. IoT can deliver data quickly, and in real-time, allowing you to solve problems before they become disasters.

Reduced Risk
When you can track what’s happening to a consignment, you can reduce the risk and make adjustments to delivery routes, packaging and other factors to ensure that your consignment arrives on time, and in perfect condition.

Perfect for High Value Goods
Because there’s the ability to reduce risk, IoT is an excellent solution for high value goods, where lost or damaged goods have a significant impact on customer service delivery benchmarks and the bottom line.

Improved customer service
If you’re looking to deliver a premium level of customer experience, then IoT can help you achieve this by allowing you to ensure fast, safe delivery thanks to improved data insights.

Disadvantages of IoT in Supply Chain Management

IoT Tracking Sensors
While huge improvements have been made in the size of the sensor, there’s still some work to do in making them small enough to be included in individual parcels, instead of in a crate or carton.

If you’re sending thousands of parcels, the sensor really needs to be attached to the parcel itself, and we are still a way off from achieving that.

There’s also the issue of reuse. Currently, sensors need to be used over and over again.

The ideal solution to this issue, is a barcode that contains an IoT sensor, that could be printed and then safely disposed of. But it would need to have a battery inside it to make it work.

The good news on this front, is that batteries are getting smaller and smaller. Here at Freight People, we’re working with a Swinburne University research team and iMove Australia to conduct studies around how we can develop really small, environmentally friendly sensors.

Cost
With the need for a fleet of tracking sensors in rotation, the cost of IoT for freight really means that right now, it’s a solution that’s only viable for some (which is why it’s ideal for high value goods).

Today’s technology simply isn’t up to speed with the need. But over time, as the size of the battery is reduced and we find ways to imbed batteries in barcodes, IoT will become a more accessible and common occurrence when it comes to freight.

Internet Connection
As it says in the name, the other challenge with the Internet of Things is that it needs an internet connection to function. For freight, this can be tricky as the consignment is always on the move, so a stable internet connection isn’t always available.

As 5G begins its rollout and internet technology improves, we’ll see an improvement in IoT as well. But for now, it must be a consideration for businesses looking to implement IoT into their supply chain.

Key Takeaways

Customers expect a lot these days when it comes to how companies use data to make their life easier.

The Internet of Things provides an amazing opportunity for your business to access better data, that will in turn allow you to reduce risk, grow revenue and improve delivery performance – all of which will allow you to deliver a premium level of customer service.

If you’re ready for your freight to benefit from the Internet of Things, then Freight People can help. We work with you to understand your needs, reverse the logistics of your freight requirements and implement an IoT solution that is tailored to your needs. Paired with our freight management platform Cario, you’ll be able to get immediate access to the data that will help you make the informed business decisions that impact your bottom line.

Get in touch today to learn more about how IoT can improve your freight management.