Internet of Things (IoT) Impact in Supply Chain and Logistics: Advantages, Examples, and Obstacles

Internet of Things (IoT) Impact in Supply Chain and Logistics: Advantages, Examples, and Obstacles

The Internet of Things (IoT) is revolutionizing the logistics and supply chain industry, offering a multitude of benefits that extend beyond operational efficiency and security improvements.

IoT technology is becoming a prominent solution for transforming and addressing challenges in global supply chain networks. From retail to manufacturing, IoT devices can be deployed across different parts of the supply chain, including transportation, distribution centers, and even agriculture.

Aker, for instance, uses IoT in agriculture to avoid production loss by rigorously evaluating deep real-time crop observation using drones, 3D video cameras, big data technologies, and machine learning. On the other hand, Maersk uses the Internet of Things to track car deliveries to its worldwide vendors and for remote container management, saving resource waste and preventing the deterioration of perishable cargo.

One of the key advantages of IoT in supply chain and logistics is its ability to provide real-time visibility into shipments, inventory, and equipment status. This enhanced transparency allows better coordination between different stages and quicker adaptation to market demands or changes.

Moreover, IoT solutions offer predictive maintenance, smart warehousing, and improved fleet management. Continuous monitoring of equipment through IoT sensors helps detect potential breakdowns before they occur, reducing downtime, extending asset life cycles, and lowering repair costs. IoT technologies such as RFID tags and scanners automate stock level tracking and location management, reducing manual labor and inventory errors, improving stock accuracy, and speeding up warehouse operations.

Integrating IoT with robotics improves precision, consistency, and productivity in logistics tasks, freeing skilled workers for strategic roles and reducing human error. IoT also enables personalized and timely delivery updates, smarter recommendation systems, and more reliable service — all contributing to higher customer satisfaction and loyalty.

However, implementing IoT in logistics and supply chain comes with challenges. Sustainable connection is crucial for IoT in supply chain and logistics as it requires a reliable network connection with enough speed to enable continuous data collection and transfer to fully utilize all supply chain IoT features. Data security is a concern as hacker assaults, breaches, and data processing and storage weaknesses can harm a company's reputation and increase the likelihood of failure.

Lack of relevant skills is another challenge as warehouse employees and truck drivers will need extensive training to adjust to managing networked systems. Costly implementation is also a hurdle, as even though one of the objectives of deploying IoT apps is to lower operational expenses, doing so takes significant investments during the initial phase that can be difficult, particularly for young businesses just starting. Energy Consumption is a challenge in IoT in supply chain and logistics as IoT devices are gadgets designed to function continuously for an extended period, and maintaining such a massive IoT system can be extremely time- and money-consuming.

Despite these challenges, the global IoT end-users solutions industry is expected to reach a market share of $1.6 trillion by 2025, indicating a promising future for IoT in logistics and supply chain. Notable real-world applications include Amazon’s IoT-powered fulfillment centers and DHL’s connected fleet systems that illustrate these multifaceted advantages.

Beyond improving efficiency and security, implementing IoT in logistics and supply chain offers several additional benefits such as strategic agility and resilience, greater transparency and coordination, predictive maintenance, smart warehousing, reduced manual labor and enhanced automation, improved customer experience, and enhanced fleet management. These benefits collectively elevate business performance, making supply chains more adaptive, customer-centric, and sustainable.

1. As the finance industry seeks to digitally transform, machine learning integrated with IoT solutions can optimize business processes, enhancing supply chain management by providing real-time analytics and predictive insights.
2. In various industries, the adoption of IoT technology has led to advancements beyond operational efficiency, with applications like Aker's precision agriculture relying on machine learning to minimize crop loss and Maersk's logistics solutions to streamline container management and reduce resource waste.
3. The potential of IoT technologies in business extends beyond logistics and supply chain, empowering sectors such as finance to adopt digital transformations, utilize machine learning for intelligent decision making, and generate new opportunities for growth in a technologically driven marketplace.

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