How Does IoT benefit the Supply Chain?

Dinesh Thakur

13 Feb 2025

In recent years, there has been a sharp increase in demand for supply chain management services due to the increased need for products. Delivering raw materials and completed goods on schedule is important to businesses in order to maintain operations and satisfy consumer needs. 

However, supply chain networks also have to deal with issues like a scarcity of raw materials and essential resources, a lack of labor, increased traffic, ineffective management, etc. Regardless of the items they deal with, supply chain networks are unable to meet demand for product deliveries as a result of these issues. 

Most supply chain networks are switching to Industry 4.0 technologies to address these issues. One of 4.0 technology's key components, the Internet of Things (IoT), is drastically changing supply chain management. Complex supply chains may be made into fully connected networks with the aid of IoT, which also keeps them informed at every stage. 

In this blog, we will explain the role of IoT in the supply chain, the benefits it offers, and best practices for using IoT to improve visibility, cut costs, and overall efficiency of business operations. 

Role of IoT in Supply Chain Management

To understand how IoT benefits the supply chain, first, we need to know what is IoT and how it works. 

So, IoT (Internet of Things) is basically an interconnected network of smart devices that are tuned to record, store, analyze, and transmit data. However, these devices cannot work without proper connectivity. In order to fully execute their functions, they must always be connected. 

GPS trackers, image devices, cameras, accelerometers, and temperature sensors are among the smart devices most frequently used in supply chain and logistics applications to gather data and maintain accuracy. 

What is IoT?

Basically, the Internet of Things is a network of smart devices connected to the Internet. These devices can exchange data with other devices and systems. IoT devices include household objects, smart appliances, industrial tools, and vehicles. 

How does IoT work?

IoT devices are equipped with software, sensors, and various other technologies that enable them to connect and exchange data with other devices and systems connected to the internet. In Logistics and supply chain management, tracking is one of the major challenges faced by most organizations. They need to track vehicles and consignments, as the entire supply chain suffers whenever something goes wrong. 

IoT helps prevent bottlenecks and ensure the smooth functioning of the supply chain from manufacturing units to end customers, making tracking more convenient than ever. It uses the power of cloud, analytics, and mobile computing to help companies manage their logistics and supply chain management operations.

The technology makes use of sensors, trackers, imaging devices, and more devices to collect real-time data which is then stored, analyzed, and processed in the cloud. IoT helps organizations save time, effort, and resources by automating processes throughout the supply chain. It minimizes the chances of errors and improves the efficiency of SCM operations. Also, it helps prevent incidents before they become prominent.  

Applications of IoT in Supply Chain Management

IoT offers organizations new opportunities and tools to manage and control their supply chain operations conveniently. Let us explore how supply chains can benefit from using the Internet of Things. 

Shipment Tracking and Cargo Monitoring

IoT enables GPS trackers and other devices to enable logistics companies to track their consignments anytime along their route. They offer precise real-time data to track the status and location of a consignment. 

The tracking data allows businesses to optimize their delivery routes, minimize the risk of cargo loss or damage, and improve the efficiency of their services. In case of any issues like cargo damage or delayed deliveries, IoT ensures quick response and appropriate action to fix the issue. 

Smart Transportation Facilities

Sensors and communication devices are installed on vehicles, containers, and other transportation equipment. These sensors help logistics companies track the status of their consignments in real-time. 

In addition, they allow them to monitor the performance of their transport fleet, prevent accidents, and optimize their routes according to real-time traffic. This helps them take alternative routes to minimize transportation time and fuel costs. 

Fleet Management

Logistics companies need to gather real-time data regarding the availability of vehicles in their fleet. IoT-enabled tools assist businesses in streamlining their workflow by offering real-time availability of vehicles at any time. 

Fleet Maintenance Monitoring

The use of IoT minimizes the problems related to potential vehicle and equipment breakdowns. Smart devices equipped with sensors detect abnormalities before they become severe to avoid serious breakdowns. 

For example, they monitor engine performance, tire pressure, fuel consumption and other crucial parts of vehicles that can cause a breakdown. Vehicle monitoring enables logistic companies to identify, how many vehicles are there and estimate the volume of packages they can send for deliveries. 

Predictive Analytics

IoT can help generate large amounts of data from devices used in the entire supply chain. There is specialized software that uses this data to predict demand patterns, future trends, and supply chain disruptions. It analyzes the real-time data, IoT IoT-based predictive analytics tools can recognize patterns, and any potential issues and recommend actions to minimize the associated risk. 

Supply Chain Visibility

The use of IoT helps improve supply chain visibility by mapping the entire network. This is done by using sensor-based devices for monitoring everything from suppliers to retail stores. The mapping process gathers information about all the suppliers, and people working in a supply chain, to create a global map of the network. 

Visualization enables organizations to detect bottlenecks, inefficiencies and vulnerabilities throughout the supply chain network. In addition, it identifies the dependencies and vulnerabilities to facilitate mitigation strategies. 

Asset and Inventory Management

Logistics companies use IoT to monitor and manage their assets. By making use of IoT tools, managers will no longer need to depend on data entries or conventional devices to keep records of the assets and inventory. 

IoT enables device enables managers to access important information about deliveries, including the package contents and storage instructions. In simple words, IoT devices help companies keep track of every product and package entering and leaving the warehouse and the available inventory at any time. 

Locate Goods in the Warehouse

With the use of IoT, employees in logistics companies can discover goods quickly and travel to the precise aisle for a specific product.  They make use of real-time location trackers to track the location of goods stored in a warehouse. The real time tracking of goods contributes to the efficiency of warehouse management. This further makes inventory management more accurate and improves the workflow and quality results in the supply chain. 

Benefits of IoT in Supply Chain Management

Enhanced Visibility and Tracking

The "Internet of Things" is the real eyes and ears of the entire supply chain.  It offers real-time tracking and data collection that are crucial for optimizing processes and enabling organizations to improve their decision-making. In addition, it helps you monitor goods, and their real-time location as well as the available inventory. The real-time tracking of goods and packages leads to a smooth flow of day-to-day operations. 

Improved Efficiency

Supply Chain companies handle a lot of data that needs to be analyzed to make operational improvements. The Internet of Things helps these companies to do that by automating various processes like shipment tracking, inventory management, predictive analysis and more. Automation of these processes contributes to enhancing the day-to-day efficiency and productivity. 

Better Collaboration Between Teams

Complex value chains tend to degenerate into data silos (isolated collection of data). As teams working in the supply chain use different sources of information and the lack of communication leads to the development of bottlenecks. 

This is especially seen in companies using outdated systems with low data analysis capabilities. IoT-based software solutions help break down data silos by providing a single version of precise information across the entire supply chain. It improves teamwork and minimizes the chances of data silos. 

Process Automation

Logistic companies depend heavily on automation to minimize physical labor, cut costs and risks of human errors, enhance the speed of deliveries, and improve overall efficiency. IoT has made it possible with automation in all these areas. 

Devices like Drones can be used as tools to manage warehouses, and such devices can also be used to operate the entire infrastructure remotely and track the status of every operation involved in the supply chain. 

Minimize Costs and Risks

The use of IoT in supply chain management helps organizations minimize risks and costs in many ways. It enables them to streamline inventory management, minimize operational risks, and identify any issues earlier to fix them at the right time. 

Cost efficiency is another primary benefit of leveraging IoT in the supply chain. Businesses can optimize delivery routes, identify equipment maintenance needs, avoid overstocking, damage, or spoilage, and minimize the need for manual labor. All these factors make the business less risky and more sustainable. 

Enhanced Customer Experience

The smooth functioning of supply chains helps businesses meet their customer expectations by offering timely deliveries. This is made possible due to precise monitoring of shipments and goods in real time with IoT-enabled devices. 

By identifying any issues proactively, managers are able to fix them early, such as directing drivers to take alternative routes or rescheduling deliveries. Improved customer experience also leads to business growth. 

Enhanced Demand Forecasting

IoT helps businesses gather real-time data, enabling them to make more informed predictions about future demand. By predicting future demand, supply chain operators can adjust their strategies for production and distribution to fulfill customer needs. 

Regulatory Compliance

Logistic companies need to comply with multiple local regulations as they need to deliver goods in multiple locations. IoT helps them adhere to these regulations and litigation prevention by automating paperwork and complying with legislation. IoT-based solutions conduct a digital audit trail with precise timestamps and reports. 

Challenges in Implementing IoT in Supply Chains

Considering the importance and benefits, every business dealing in supply chain management would like to introduce IoT in their operations. However, implementing IoT is not so, easy as there are some challenges that need to be addressed before doing so. Here are some common challenges that every enterprise faces while implementing IoT in their supply chain. 

Data Security and Privacy

Devices and sensors enabled with IoT collect a lot of data from the supply chain that needs to be protected. Creating a secure and compliant architecture is essential for implementing IoT in a business, but not easy. Therefore, there is a need for an expert team who can introduce robust security measures into the IoT software for the protection of businesses and customer data. 

Integration and Interoperability

IoT devices and sensors that are used in any supply chain are manufactured by some companies. This poses a major challenge in the integration of devices with your systems and applications. Another major challenge is interoperability, which is the exchange of data or information between IoT devices and your existing systems. The IoT devices or software might not be completely proficient in the integration and transfer of data with the devices in your supply chain. 

Scalability and Complexity

As a business grows with the number of customers, the supply chain operations also increase and the IoT system's scalability becomes a major concern. Scaling to meet those demands requires strategic planning in order to deal with the addition of IoT devices and data sources in the supply chain. An expert team with relevant expertise in IoT is required to meet the scalability needs of the business. 

Lack of Standards and Regulations

Another challenge faced by supply chain businesses is the lack of standardized regulations and protocols for IoT systems. It is crucial to follow the relevant regulations and industry standards. Businesses may need to collaborate with a legal team to ensure the IoT systems comply with industry standards and regulations. 

How DITS can Help you Implement IoT in your Business?

As now, you are familiar with the importance of IoT in supply chain management, you might be thinking of using this robust technology for your business. You have also read about the common challenges faced by supply chain operator in implementing IoT in their operations. 

To make things easier, we have a team of professionals who have years of experience developing IoT applications and assisting companies in utilizing this powerful technology. We can assist you with integrating IoT into your company and integrating it with your current systems, such as your tracking devices, fleet of vehicles, or warehouse, thanks to our years of practical expertise developing custom IoT software.

We can assist you with meeting your scalability needs, regardless of whether you are an established company or a startup trying to grow. By meeting your customers' demands through real-time tracking, optimized routes, inventory control, and expedited delivery, our proficiency in IoT integration and deployment can help you grow your company.

Contact us now and get ready to see how the IoT revolution takes your business to the next level. 

FAQs

What is IoT, and how does it work in supply chain management?

Real-time data interchange is made possible by the Internet of Things (IoT), which links physical objects to the internet. IoT devices, like as sensors and trackers, are used in supply chain management to keep an eye on assets, shipments, and inventories. This data is used to make better decisions, streamline processes, and increase efficiency throughout the supply chain.

How does IoT improve shipment tracking and cargo monitoring?

By employing GPS units and environmental sensors to track position, temperature, humidity, and security in real time, IoT improves package tracking. This improves overall cargo safety and delivery reliability by guaranteeing improved visibility, lowering the chance of damage or loss, and facilitating prompt reactions to disruptions.

What role does IoT play in fleet and asset management?

By tracking cars and equipment in real time, IoT improves fleet and asset management. It keeps an eye on driver behavior, location, fuel use, and maintenance requirements. In order to ensure effective and dependable transportation, this data assists with route planning, downtime reduction, asset utilization, and operational cost reduction.

How does IoT enhance supply chain visibility and efficiency?

Real-time information on equipment operation, shipment status, and inventory levels is provided via IoT devices. Proactive decision-making, quicker problem-solving, and more efficient operations are made possible by this visibility. IoT dramatically improves supply chain responsiveness and efficiency by cutting down on errors, delays, and resource allocation.

Can IoT help with demand forecasting in supply chain management?

Yes, by gathering real-time data on sales, inventory, and customer behavior, IoT helps with demand forecasting. Trends, seasonal needs, and possible interruptions can be found with the use of this data in conjunction with predictive analytics. Companies can minimize overproduction or stockouts, optimize stock levels, and generate more accurate projections.

What are the cost-saving benefits of implementing IoT in supply chains?

By increasing route efficiency, reducing downtime through predictive maintenance, and optimizing asset use, IoT lowers costs. Monitoring in real time reduces the chance of spoiling, damage, and theft. Additionally, data-driven insights optimize processes for long-term savings, and improved inventory management lowers waste and storage expenses.

What challenges do businesses face when implementing IoT in supply chains?

High upfront investment expenses, data security threats, and complicated system integration are some of the difficulties that businesses confront. It might be difficult to maintain device interoperability and manage massive data volumes. Successful adoption also depends on filling skill gaps in the workforce and sustaining IoT infrastructure.