Success factors of IoT in Inventory Management for Enterprises

The internet of things (IoT) connects physical machines and equipment in a factory to the digital world of cloud, data analytics, and artificial intelligence (AI). It enables you to collect more data, analyze the information quickly, and make better business decisions.

The dawn of the Internet of Things (IoT) is upon us and it is set to revolutionize many industries including inventory management.

So what are all the success factors of IoT in Inventory Management?

Some of the success factors that improve Inventory Management are listed below.

Data Analytics solutions

With big data, operations managers may have an overview of real-time operations and better access to metrics, which helps to remove bottlenecks and improve efficiency. Big data enables supply chains to proactively enhance performance compared to traditional models.

Data analytics give managers insight into the available spaces in their warehouses so they can effectively plan for incoming shipments as well as determine if they need to downsize or expand their warehouses.

Inventory optimization based on insights from the metrics can help businesses provide a better balance between supply and demand variability — often with immediately noticeable results. This is particularly true for distributors that have a significant amount of working capital in inventory. For them, even small improvements in inventory planning can have a major impact on cash.

The use of performance analytics plays a key role in the inventory management and optimization processes by helping manufacturers and distributors better determine their stocking targets and if there are any upstream or downstream issues that need to be addressed.

Companies with excess inventory should consider gross margin return on inventory (GMROI) analytics to review inventory decisions from a return on investment perspective.

Data Analytics services

Having access to real-time customer demand pattern data helps service managers match inventory and inventory levels with customer orders accurately, which will contribute to increased customer service levels. Data can be analyzed to predict seasonal trends, spikes, or depressions in customer demand to ensure the right levels of inventory are maintained at all times.

Micro tracking

Micro-tracking is enabled with the expanding IoT capabilities, combined with 5G wireless data transmission. Inventory management systems will be able to increase in granularity to not only track a package but to also be able to track the individual items inside.

Itemized inventory tracking continues through the warehousing and processing until the item is used in manufacturing, sold, or written off as a loss for various reasons.

Micro-tracking is limited to items that can contain a physical RFID chip or have a barcode stamped on them or their packaging. To be cost-effective, the items must have an individual value that is sufficiently high enough to be worth using inventory tracking methods to account for them. However, with IoT, the number of specific inventory items that will be tracked will increase by the trillions.

Touchless Data Collection

The best practices for an inventory management system using IoT are to have as little human intervention as possible. Data collection of the inventory items should be highly-automated so that when each item passes through a scanner, its presence in inventory is tracked and recorded. When the item is used or sold, physically moving it out of the warehouse through another scanner (or at another checkpoint in the supply chain) reduces the inventory count for that item.

Artificial Intelligence Algorithms

Algorithms developed using computer-learning AI systems may be able to track and manage inventory better than a human counterpart. By scanning IoT data, the AI system may identify patterns that a human being may not find. This process may improve inventory management decisions.

AI may be used on its own to improve system functions such as replacement inventory ordering, or it may be combined with human supervision and human decision-making about note-worthy data patterns discovered through the AI algorithms.

Cloud Computing

Using AI with cloud computing has tremendous benefits. Cloud computing offers significant computational processing needed to create the benefits of using AI and IoT systems for inventory management. This cloud-computing processing power enables data mining of large sets of data by applying sophisticated analytics, in order to make accurate predictions.

GPS Locations

If an organization’s inventory includes equipment and vehicle fleets, then the IoT is very useful. Tracking mechanisms use GPS locations to collect data about where the equipment or fleet vehicles are always. This data helps manage the utilization of the tracked items and helps prevent loss or unauthorized use.

Integration with Robotics

Inventory management using IoT systems allows easier integration with robotics that is used in conjunction with inventory processes. For example, many online retailers have a significant amount of work needed to do in picking items to fill a customer order. Robotics can do this work more efficiently in conjunction with IoT-connected inventory items and systems.

Embracing IoT for inventory management is, in general, a wise decision for most organizations. However, there are concerns about IoT implementation that need to be considered as well. They are the investment cost, standards that help devices communicate with each other, security, and scalability. Certainly, all those issues must be addressed to create a successful inventory management system using IoT.

Despite these concerns, the cost of the IoT technology continues to decrease and the deployment of IoT for inventory management continues to advance. For many organizations, this is rapidly becoming a cost-effective and efficient solution for inventory management.