Increasing supply chain transparency with IoT: a paradigm shift in operational monitoring

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In the complex landscape of supply chains, with numerous obstacles, multiple paths and numerous dead ends, IoT - Internet of Things - technologies have quickly become a game changer in operational monitoring.

The main objective of this article is to provide stakeholders with insights and show how this technology can transform the supply chain. Through IoT transparency solutions to improve supply chain and visibility and ultimately provide actionable insights.

The importance of supply chain transparency in the modern business environment

Supply chain transparency, also known as supply chain visibility (SCV), is a fundamental pillar of contemporary business strategies and acts as an indispensable compass for navigating the complexity of global supply chains.

In the current era, which is characterized by deep interconnectedness, marketplaces are closely interlinked. Within this complex ecosystem, SCV has established itself as a central hub for companies aiming to optimize their operations, minimize risks and ensure an excellent customer experience.

logistics supply chain with a factory warehouse

The essential function of SCV is to provide a comprehensive real-time overview of the flow of goods, stock levels and the status of processes at various touchpoints along the supply chain.

SCV provides crucial data on key points and steps in inventory management. For example, it enables precise tracking of food transports - from their current location to the state of their refrigeration and beyond.

At its core, SCV provides companies with actionable insights and enables them to make agile decisions and act proactively. With real-time visibility of stock levels, companies can avoid stock-outs or overstocking.

This results in an optimal balance, which translates into reduced costs and increased efficiency. The improved SCV enables companies to identify potential bottlenecks or disruptions at an early stage before they escalate, thus promoting resilience to ensure uninterrupted operations.

Nevertheless, it is important to emphasize that traditional approaches to SCV often reach their limits when it comes to delivering the agility and immediacy demanded by the ever-evolving supply chain landscape. This challenge has created the need for an industry-wide paradigm shift.

The vision of what could be possible already exists, but the adequate tools to implement it have been lacking until now. Thanks to digitalization, companies are now able to use innovative solutions such as the Internet of Things (IoT) to overcome these limitations and achieve a higher level of visibility and operational control.

Statistics on the impact of IoT on transparency in the supply chain

  • Companies that rely on IoT technologies in their supply chains are seeing a remarkable 20% reduction in disruptions.
  • Furthermore, a 15 percent reduction in storage costs was found for companies that have integrated IoT into their supply chains.
  • Last but not least, there was a pleasing 10% increase in customer satisfaction among companies that rely on the potential of the IoT in their supply chains.

Understanding IoT in the context of transparency in the supply chain

The fundamental importance of the Internet of Things in the context of supply chain transparency is illustrated by the current interconnectedness of our world, both on a micro and macro level. From the smart functions of our wearables that capture health data to global markets and predictive algorithms, the IoT permeates all levels of modern life and business.

Your smartphone is a treasure trove of data, your Roomba collects extensive information about your cleaning habits and the architecture of your home, while robotics in manufacturing plants generate terabytes of data about product quality, shipping rates and other key factors.

In supply chain transparency, IoT-enabled systems act as a catalyst, reshaping the landscape with innovative capabilities and taking operational oversight to a new level:

Real-time localization

IoT-enabled sensors and devices enable the meticulous tracking of goods throughout the supply chain. By communicating over 5G or 4G networks, GPS sensors and microchips provide precise insights into the movement and status of products, enabling unprecedented visibility from production to delivery.

Monitoring critical load conditions

The power of IoT also extends to monitoring critical cargo conditions such as temperature and humidity. IoT-controlled chips, connected to hardware such as temperature sensors, allow you to accurately track the health of your products and ensure optimal environmental conditions during transportation. In this way, IoT protects the integrity and quality of perishable or sensitive goods and minimizes potential losses.

logistic container truck on highway

Optimizations in asset and fleet management

By using IoT visibility devices, companies are embarking on a transformative journey that enables efficient use of their resources. A deep understanding of the need to strategically plan all necessary "pit stops" or maintenance tasks is the foundation. IoT-driven asset and fleet management initiatives not only optimize asset utilization and maintenance, but also increase operational efficiency and minimize downtime.

Predictive maintenance and uninterrupted operation

The predictive maintenance capability of the IoT-enabled supply chain is proving to be an effective safeguard against equipment downtime. Through the intelligent use of IoT data insights, companies are able to identify potential issues early before they develop into serious faults. This enables the implementation of proactive maintenance measures that ensure uninterrupted operations.

This capability is undoubtedly one of the most disruptive and valuable assets of the modern business world - big data analytics. With the appropriate application of AI and sophisticated algorithms, companies can efficiently control the inherent chaos in complex systems and predict what was once considered unpredictable.

Precise demand forecast

The Internet of Things' (IoT) wealth of data is a key contributor to accurate demand forecasting, providing companies with insights and significantly increasing the accuracy of inventory management. This sophisticated precision enables companies to harmonize supply and demand, which in turn minimizes excess inventory or stockouts.

Whether it's Christmas, Black Friday or Valentine's Day, companies can not only predict months in advance what stock they will need for a particular product, but also use sales figures to determine exactly which products will be in high demand. This forecasting ability is developed and refined year on year.

Dynamic rerouting and optimization

By integrating real-time traffic and weather data using IoT visibility solutions, companies are able to dynamically reroute shipments. This adaptive approach significantly reduces delays and optimizes delivery times. The result is timely and efficient deliveries while reducing costs, such as fuel, by predicting traffic and rerouting drivers to more energy-efficient routes.

Automated responses to disruptions in the supply chain

The agility of IoT manifests itself in automated responses to supply chain disruptions. By streamlining responses through automated protocols, companies minimize the impact of unforeseen events and ensure rapid resolutions.

Synergy between IoT and blockchain

The combination of IoT transparency solutions and blockchain strengthens transparency and security along the entire supply chain. This synergistic combination promotes an immutable register that ensures the traceability and authenticity of every transaction and movement within the supply chain network.

The future has already begun

The future has already arrived and the available statistical data clearly confirms the transformative impact of the Internet of Things (IoT) on supply chain transparency. Various independent sources unanimously reflect the tangible benefits that companies are gaining by implementing IoT solutions. The fusion of IoT technologies with supply chain visibility has opened the gates and is ushering in a new era of operational excellence.

IoT has already proven its effectiveness by reducing supply chain disruptions by 20 percent, lowering inventory costs by 15 percent and increasing customer satisfaction by 10 percent. But its potential extends beyond these immediate benefits and is poised to shape the future of supply chain management in profound ways.

The next few years promise even greater innovations. The proliferation of IoT-enabled devices and sensors will continue to expand, creating a robust ecosystem in which connectivity becomes ubiquitous. Smart devices connected through IoT networks will revolutionize supply chain operations and enable autonomous, self-optimizing systems that anticipate and respond to changes in real time.

As the IoT matures, organizations are able to leverage its advancements to strengthen their supply chain operations, promote resilience, drive innovation and ultimately gain a competitive advantage in an ever-evolving global marketplace.

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Published November 1, 2023

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