The ‘Internet of Things’ (IoT) is a term used to encompass the use of sensors, technology and networking to allow buildings, infrastructures, devices and additional ‘things’ to share information without requiring human-to-human or human-to-computer interaction. When leveraged prudently, it can create richer data and deeper intelligence for all parties in a Supply Chain network.
In this article we will explore four applications in the area of Inventory Management:
Shelf Inventory Management
Leveraging sensors on shelfs to identify the level of on the shelf inventory in store can be used to create a process where the products can be ordered automatically. Taking it further, stocks level on retail shelves and stockrooms and distribution centers as well as other stores can be linked and viewed, theoretically, on a real time basis. With this infrastructure in place, you can optimize your returns as well, by re-routing returns to stores where there is demand, rather than re-routing to the warehouse.
Pipeline Inventory tracking
Logistics containers leveraging IoT technology are already in place. There are many different levels of sophistication of sensors used in the tracking of containers. Some log data for download at a later point, while others can use GPS technology to provide real-time tracking, alert when the door has been opened or environmental parameters have been exceeded (ex: temperature).
From a Inventory Management perspective, integrating these sensors with a cohesive Inventory management system and gaining visibility into the consignment within the container will provide real time visibility into pipeline inventory, which is often used into Inventory position calculation.
Also, this tracking will also flag any issues with the transportation lead time, which is one of the inputs in safety stock calculation.
IoT technology, as mentioned above, can help track key parameters that are frequently used in Inventory calculations like Demand, lead time, on hand inventory, pipeline inventory etc. Integrating data generated by these sensors with an Inventory monitoring and optimization tool in the cloud and then allowing the tool and an intelligent algorithm to place orders will help minimize stock outs and Inventory costs significantly.