How To Improve Your Supply Chain With IoT Inventory Management?

Updated on Dec 18th, 2023


Inventory management – understanding how much inventory you possess and how it moves through your supply chain – is more important than ever in modern supply chains because there are so many variables involved. Inventory monitoring allows you to keep track of all of your business’s items and inventory. Excess inventory demands additional resources such as warehouse space and locks up capital. In today’s world, the supply chain is more than just a means of maintaining track of your product; it’s also a way to obtain a competitive advantage by developing your brand.

The IoT is the right solution for inventory management, which is extremely dynamic. Small firms implemented obsolete or inadequate inventory tracking technologies in 84 percent of cases. IoT sensors outperform all other solutions regarding visibility, effectiveness, and flexibility.

Key Takeaways

  • Inventory tracking maintains a record of all of the items and inventory in your business.
  • The Internet of Things has the capacity to redefine the way contracts are signed. It allows shippers to establish product storage standards, develop explicit protocols in the case of a breach, and file a warranty claim when storage conditions go beyond the limits.
  • The Internet of Things (IoT) is made up of about 30 billion devices, each of which gathers information that a facility can use.
  • The Internet of Things makes the invisible visible, making supply chains more productive, faster, and transparent.
  • During the projected period 2021-2031, the IoT in inventory management market is predicted to reach US$ 15.0 billion and develop at a steady CAGR of 15%.

Today, in this blog, we’ll discuss how IoT improves supply chain management?

So, let’s start!

What is IoT Inventory Management?

By providing updated information about the status, location, and mobility of items in stock, an IoT-based inventory management system provides manufacturers accurate perceivability into the flow of components and materials, work-in-progress, and finished goods, allowing business owners to see when an individual inventory item is running low.

Tags are used to track every product in an IoT in inventory management solution. A unique identification number (UID) on the tag contains encoded electronic information like the model, batch number, expiry dates, and so on. RFID readers scan the tags and obtain the tags’ unique identifiers (UIDs). They then send the data to the cloud to be processed. The reader’s position is sent to the cloud along with the tag’s UID. The cloud calculates the product’s position and shows a real-time update based on this information.

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Why is IoT in Supply Chain Management So Much Needed?

Shipping companies and manufacturers are under rising stress to juggle enormous volumes of data from many sources as global supply chains become more complex. At the same time, they must manage stakeholders and ensure that shipping goods arrive on time. There isn’t much room for error. Overstocking and unanticipated sellouts were major difficulties due to a slowdown in key industrial hubs combined with significant shifts in consumer demand.

The catastrophe demonstrated more clearly than ever before that the lean supply chain had limitations. IoT devices have the potential to improve supply chain transparency. One instance is the use of sensors in shipping containers. These gadgets offer a regular update on the location of the container and other important information. They can report environmental factors and provide real-time updates on the temperature and humidity of a specific cargo to a manufacturer. This information can be highly useful in ensuring that shipping conditions are as good as possible. Managers can pinpoint where and when an error resulted in incorrect cold chain temperatures.

Apart from these, other disadvantages of outdated inventory management software include the following:
You will never have accurate inventory data if you implement antiquated spreadsheets to manage inventory. For example, suppose you failed to update the manual sheet after shipping the last piece of a product in the warehouse. 
To maintain profitability, businesses need to take a centralized strategy. A decentralized method is used in the manual inventory management system. This means that data is updated on a regular basis.
Manual inventory management fails to bridge the gap between supply and demand. Furthermore, it is unable to foresee the future or to streamline data in order to identify trends. If you don’t maximize your IoT inventory, you risk stockpiling non-essential items with no orders.
Keeping track of inventories is inefficient and raises labor costs. Manual inventory management increases the chances of misplacing items.

IoT has the potential to change the way contracts are signed. It enables shippers to define product storage criteria, develop explicit processes in the event of a breach, and file a warranty claim when storage circumstances exceed limitations. The degree of transparency adds value by ensuring that statements are supported by evidence rather than guesswork.

For organizations to run effectively, IoT inventory optimization is essential.

But, how?

Let’s move forward, and discuss the same!

How can IoT in Inventory Management Improve the Supply Chain?

The groundwork for a digitalized approach is laid by an IoT Inventory Management solution. It has numerous advantages; below, we’ve mentioned a few of them. So, take a look!


1. Enhances Data Transparency and Visibility

The openness of IoT inventory management benefits a facility’s operating efficiency in more ways than one. The more IoT devices a warehouse uses, the more pieces of information it will collect. This visibility provides them with operational data they wouldn’t have otherwise, allowing them to continue to improve. The Internet of Things (IoT) includes more than 30 billion gadgets, each of which collects data that a facility would find helpful. RFID tags, for example, might tell which things workers choose the most frequently throughout a given season. Warehouses can then utilize this knowledge to restructure their inventory; grouping goods frequently picked together to increase efficiency.

2. Ensures Better Traceability

End-to-end traceability throughout your supply chain allows you to keep track of your inventory from the original location to the point of destination, allowing you to better respond to requests and recalls. Traceability facilitated by IoT and blockchain creates a digital paper trail that allows you to follow your inventory from the manufacturer to the customer. Accurate, real-time end-to-end details assist you in optimizing your inventory management procedures. Tracking and tracing each item in your inventory enhances inventory visibility and customer service while lowering inventory carrying costs considerably.

3. Streamlines Assets Tracking

Traditional asset monitoring systems such as tracking numbers and bar codes are being phased out in favor of IoT devices and sensors, allowing for the tracking and managing of commodities across the supply chain. IoT sensors can detect where and when items are delayed in transit, allowing for contingency planning and other routes to help the supply chain move more quickly. Businesses can leverage these sensors to collect detailed data such as the temperatures at which a product was stored, the length of time it was in transit, and when it was sold. This type of data obtained through IoT technology can assist businesses in improving quality control, on-time delivery, and forecasting. This type of data obtained through IoT technology can assist businesses in improving quality control, on-time delivery, and prediction. Follow the movement of assets and goods between trading partners and organizations. You can generate a digital trail of every step and safely record business transactions across your supply chain using IoT asset tracking and blockchain-enabled tracing.

4. Better Invoicing

Cross-border operations are common in global supply chains, and they cause delays since they include several parties, foreign payments, local banking laws, and a lot of paperwork. Any inconsistencies, such as duplicate invoices, might create considerable payment delays. IoT and blockchain together could speed up the movement of commodities across borders, resulting in more secure, efficient, and cost-effective transactions that prevent fraud by using a distributed ledger that cannot be tampered with. Companies can eliminate the requirement to reconcile documents among various parties using blockchain-powered smart contracts. They can keep track of the shipment’s progress and, upon delivery, carry out the contract’s payment requirements.

5. Reduces Unnecessary Costs

You shouldn’t have to invest as much on labor when your team has a lot of digital tools at their disposal. Instead of scanning the shelves for products, your warehouse personnel can instantly track and locate them. Even the most well-organized warehouse might throw some staff off, so having a digital backup of an item’s whereabouts can help with retrieval.

Smart sensors will also notify you and your team when certain goods require extra attention. As a result, you won’t have to pay your personnel to manually inspect products for damage. Employees will only be required to perform a specific action when necessary. Your staff can also employ automation technologies to do common operations such as sorting, stacking, and product retrieving in a fraction of the time.

6. Ensures Easy Monitoring of Returnable Assets

IoT in inventory management can help you track recoverable shipping assets across facilities and countries. Companies can track assets in real-time to quickly identify and retrieve missing or stolen containers, even in transit. You can look into missing assets to see any trends of theft, pilferage, or misuse by location, carrier, vendor, or client. To expedite asset recovery and conflict resolution, you can use predictions, data trails, quick notifications, and asset routing automation.

7. Better Record-Keeping

Having improved inventory visibility can assist you in getting the right products to the right place at the right time. Keeping detailed inventory lot records might help you prevent unpleasant situations like discovering that a complete batch of product or intermediate goods has expired or is soon to expire. Integrating IoT in inventory management software can assist producers in tracking and managing inventory lots from receipt to production and shipment while keeping correct information about the product and accountability for future references.

8. Better Analytics

Because of the data generated by IoT systems, businesses can use advanced analytics to acquire precise insights into their operations. Predictive analytics can be used in conjunction with real-time performance monitoring. Not only does it enable businesses to make better judgments than they could with manual techniques, but it also allows information to be accessed more quickly, drastically reducing supply-chain cycles. Improved quality control is one of the key advantages of IoT-enabled capabilities. Every supply-chain manager is concerned about spoilage and fraud, particularly given the necessity to store perishable items under stringent conditions. During transportation around the world, about 30% of fragile cargo is lost, primarily owing to uncontrolled temperatures and inadequate storage conditions. That’s where IoT-powered condition monitoring comes in, constantly checking storage conditions and providing notifications if they’re not met.



The IoT makes the unseen visible, allowing supply chains to become more productive, quicker, and traceable. Aside from improving the existing quo, the technology acts as a springboard for future development and advancements, such as automation, while also allowing for unique, creative methods and deeper client interactions. For most businesses, using IoT in inventory management is a good move. The cost of IoT technology continues to fall, and IoT use for inventory management is progressing. This is quickly becoming a cost-effective and productive inventory management option for many firms.

Contact us if you want to leverage the benefits of IoT in inventory management or streamline your business operations using IoT. Matellio has years of professional experience in building & delivering custom IoT solutions.

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