The Internet of things connects all of the objects in our lives and allows them to communicate with one another. How this impacts businesses is not always immediately apparent. One of the most far-ranging effects of IoT will come from the time and cost savings from more efficient Inventory Management, facilitated by concepts like Smart Warehouses.

It won’t be just the back office functions that will be transformed, the retail stores and front offices will also be hugely impacted by this. McKinsey predicts the IoT market will be worth $581B for ICT-based spend alone by 2020. These developments allow us to predict that IoT is increasingly going to dominate the sphere in the future.

Smart Warehouses

These days, one of the biggest ways companies are gaining an edge over their competition is through Smart Warehouses. Think Amazon, Best Buy, Walmart, and other retail giants. These companies are using the latest sophisticated technology like smart shelves and live dashboards to track and maintain their inventory in real-time, making sure that best selling items don’t run out of stock and they are able to effectively deal with different seasonal demands.

These products normally have a barcode label or an RFID tag on it, so that they can be scanned and identified by the connected systems. With IoT, every item which is processed must be tracked and recorded on inventory management systems throughout the supply chain procedure.

These tagged products can be easily tracked by ID numbers and you can immediately tell if they are inbound from vendors or outbound to customers. This makes order fulfillment and customer service better, while also optimizing production processes.

Companies hoping to take advantage of this new solution are turning to the cloud. Cloud-based inventory systems are the dominant technology for warehouses today, and they allow inventory management systems to give organizations better visibility into their own inventory levels, item location, forecast demand, expiration dates etc.

You can simply supercharge this solution by adding the IoT layer to your inventory, reducing waste and inefficiency in coordination with industry best practices. By making your inventory management smarter, you’re automatically cutting inventory costs, optimizing storage space, possibly increasing customer satisfaction levels, and ultimately boosting your bottom line.

Brick and Mortar Stores

The retail industry is facing the gigantic issue of inventory distortion, an issue that includes overstocking, stock-outs, and shrinkage, which costs the industry $1.1 trillion worldwide and $42 billion in the US alone.

But with IoT tools from companies like Intel, the stage is set for this problem to be eliminated. Intel has developed a Retail Sensor Platform that is aware of the stock levels for each product and informs salespeople of low stock so that it can be replenished in time.

One advantage of these IoT solutions for retail stores is that the displays are always looking full so customers never find an item they need out of stock. Another advantage is that retail locations can automatically send notifications to the warehouse for more stock when inventory runs low.

Another huge innovation that looks like it may totally transform the traditional retail model is that of the Amazon Go store.

Amazon has developed computer vision and sensor technology to track both customers and inventory as they walk through the store, charging customers automatically for the products they take from the shelves. The inventory can be easily monitored and once the inventory levels reach a certain level, more stock can be ordered as required.

If the concept takes off, it could mean the end of cashiers and checkout counters at most retail stores.

The versatility of IoT is its biggest strength

With all the exciting ways that IoT has already started to transform inventory management, it is hard to imagine a future where this technology will not be part of the standard practices in retail, manufacturing and every other industry that relies on inventory.

In any industry where products or objects can be linked to the cloud or to the network, it will make sense to automate the tracking and monitoring of inventory via wireless or optical tagging.

The ability to view, track, and monitor inventory will improve enormously with the IoT, resulting in better analysis and allowing you to curb inefficiencies that you would never notice otherwise. Although we are still in an early stage, the Internet of Things carries enormous potential for both consumer and company.

With the above-mentioned technology in mind, IoT also enables you to “connect” your whole supply chain and have a complete overview of the whole process: Co-packers, Regional warehouses, Retail shops, and Customers. In one such implementation, the world’s leading CPG manufacturer has adopted IoT to track the efficiency of packaging lines at warehouses in multiple countries. Using IoT technology to get a real-time view of its packaging lines at copackers, it has intelligently addressed the issue of not being able to track unplanned machine or line downtime.

However, technology alone cannot magically solve the problems your business might have. It takes effective leadership and process re-engineering to align the way employees do business to fully utilize the power of any new system.

Analyzing the data can be a challenge

Having real-time insights into every corner of your business doesn’t matter if you’re unable to analyze and react to that data.

For instance, there is no point in introducing condition based maintenance into your organization if you don’t have analytics that can pick up information from condition monitoring sensors or a person that can analyze the data and plot trends that can be used to do timely proactive maintenance work and prevent a costly shutdown.

An interesting stat from a recent report shows how 60% of enterprises don’t have the analytic capabilities to take advantage of the data generated from IoT. This is likely to change as more advanced and powerful versions of analytic software solutions become available and as people in charge of their departments learn how to fully utilize available technology.

Conclusion

With solutions like Smart Warehouses, Retail Sensor Platforms and cashier-less stores already in use, IoT for Inventory Management is not just a pipe dream. It is already in practical use in many companies and it is slowly paving the road for a major transformation in the industry which will result in reduced waste, excess inventory, shrinkage, etc. Purchasing decisions will be made only after analyzing buying patterns and demand forecasting will be greatly streamlined.

Any business that wants to stay competitive will have to adapt to the new reality where business, as usual, is no longer possible. The potential upsides of this technology are huge and the industry solutions are already available, so this is the right time to explore how IoT can be used to solve your Inventory Management problems and challenges.

Guest Author: Bryan Christiansen

Bryan Christiansen is the founder and CEO at Limble CMMS. Limble is a modern, easy to use mobile CMMS software that takes the stress and chaos out of maintenance by helping managers organize, automate, and streamline their maintenance operations.

All the opinions expressed in the post are Author’s own. Altizon keeps an unbiased view on this.