The logistics and supply chain management sector has always been fast-paced. Goods must move from point A to point B quickly and efficiently, with very little room for error. Technology has become an important part of this process, increasing productivity and reducing mistakes.
The Internet of Things (IoT) has risen in popularity over the past few years, as the newest tool that logistics companies are using to improve their operations. But what are the benefits? How does using the IoT in logistics help?
What is the Internet of Things?
The IOT is a network of physical devices that are connected to the internet and can collect, share, and respond to data. Some examples may include sensors, machinery, wearables, and appliances. These devices continuously gather data and send it to be analysed in real time.
The goal of IoT is to improve visibility, automate manual processes, and help workers make faster, smarter decisions. It has become a popular tool in many industries, from healthcare to construction, due to its vast number of use cases. Logistics companies in particular are using it to transform their operations, cut costs, and increase productivity.
IoT in Logistics: Top Use Cases
IoT is an essential part of digital transformation in logistics. It improves business processes in a number of ways:
Shipment Tracking
Using IoT, companies can track shipments in real time. By analyzing this data for patterns, they can then identify bottlenecks that consistently form and develop strategies to address them. If, for example, traffic jams tend to form on one particular road, then another route can be calculated.
Businesses can also use this information to build stronger relationships with partners. When delays do occur, partners can be informed quickly and given a timeline. This open communication promotes deeper understanding and trust.
Inventory Management
Companies can use radio frequency identification (RFID) tags to manage inventories more effectively, by tracking how much of a certain good is currently in storage. This form of demand forecasting allows them to predict when additional resources will be needed in advance, making more strategic purchases rather than using guesswork.
Over time, more effective inventory management brings enormous benefits. Businesses no longer waste money buying products too early (before they are necessary) or too late (thus spending a premium to obtain what is needed). This reduces budgetary strain, allowing companies to spend more on strategic initiatives that drive real growth.
Predictive Maintenance
Predictive maintenance is a strategy that involves predicting equipment failures in advance and addressing them just before they occur. In contrast to a more reactive approach – which often results in a continuous game of catch-up – this technique prevents downtime and saves money.
Data collected from IoT devices enables better predictive maintenance, by detecting patterns that may indicate an oncoming equipment failure. This allows logistics companies to proactively prevent breakdowns, significantly improving productivity.
The Challenges of IoT in Logistics (and How To Solve Them)
As always, with benefits come challenges. Adopting smart logistics solutions such as IoT technology can be easier said than done, hindering many companies from effectively leveraging these tools. Fortunately, these issues are relatively easy to solve.
Some common challenges of implementing IoT in logistics include:
Integration with Legacy Systems
Many logistics firms still rely on older platforms to perform certain tasks. These systems are typically not designed with IoT devices in mind, and thus may not be able to work alongside them smoothly. Without the right approach, this can drastically reduce the effectiveness of IoT implementation, or even prevent it altogether.
Perform an IT assessment before adopting any new technology, to identify any potential issues. If you cannot determine an appropriate strategy, speak to a managed service provider (MSP) with experience performing digital transformations in logistics. They can help you seamlessly integrate IoT technology into your existing IT infrastructure.
Data Overload
With so many IoT sensors collecting information, businesses can easily become overwhelmed with the amount of data they are suddenly expected to manage. This prevents workers from making good decisions, optimizing routes effectively, or identifying issues.
Identify a set of key performance indicators (KPIs) that will guide data analysis procedures. At the same time, develop a data management strategy that will allow you to focus on the most important information, rather than white noise.
Costs
Like any technology, IoT costs money to implement. Outfitting an entire transportation and logistics network with the necessary hardware and software can be cost-prohibitive, particularly for smaller companies.
Prioritize your investments. Start with low-cost, high-impact purchases that will drive as much value as possible. Once you begin seeing cost savings from those initial investments, you should have more financial freedom.
Security Concerns
More devices inherently means more potential attack vectors. Making the situation much worse, IoT devices are typically not built with cybersecurity in mind. They may not even be capable of running the same endpoint protection solutions you would typically use. Because of how much data they collect, companies can be in big trouble if these devices are accessed.
If you can’t protect the device itself, protect everything around it. Segmenting your network makes it more difficult for threats to travel through your IT infrastructure, and access controls can prevent bad actors from gaining a foothold. Learn why a business continuity plan is essential
FAQs
What is IoT in Logistics?
In logistics, IoT refers to a number of physical devices that connect to the internet and collect data. IoT enables vastly improved logistics operations by detecting patterns, predicting problems, and providing important data for analysis.
How Does IoT Positively Impact Logistics Firms?
IoT technology can be used to more accurately measure inventory levels, implement stronger route optimization strategies, and perform predictive maintenance. Over time, this translates to higher productivity, reduced waste, and improved profitability.
What Are Some Other Smart Logistics Solutions?
Other solutions that may help improve logistics operations include cloud computing, AI-powered data analytics, and centralized management platforms.
Can Small Companies Benefit From IoT Technologies?
Definitely. Smaller logistics firms may encounter more financial challenges when first adopting IoT solutions, but the long-term savings make it worthwhile.
Driving Sustainable Growth With Smarter IT Solutions
Technology is one of the most underrated tools that the logistics industry has access to. With the right strategy, your IT can become a powerful driver of growth and profitability. The IoT is just one way you can use technology to improve efficiency, security, scalability, and financial stability.
If you’d like to explore more ways technology can contribute to business success, Ascentient has you covered. Read our article to learn about business-IT alignment, and discover why your technology is more important for long-term growth than you think.