What is the Internet of Things?
The Internet of things describes physical objects that are embedded with sensors, processing ability, software, and other technologies, and that connect and exchange data with other devices and systems over the Internet or other communication networks.
The technology behind IoT-based inventory management:
In an inventory management system that uses IoT and RFID technology, all inventory items that need to be tracked carry an RFID tag. Each tag features a unique identification number (UID) that has encoded digital data about an inventory item, e.g. a model, a batch number, etc.
These tags are scanned by RFID readers. On scanning the RFID tag, a reader gets information about the tags’ IDs and sends this data to the cloud for processing.
The cloud also sent data regarding the location of the reader and the time at which data is recorded. On the basis of this data, the cloud gives the location of the item with the corresponding ID, generates a visual output of the findings, and displays real-time updates about inventory items’ movements to the users.
In this way, IoT and RFID technology allow monitoring of the inventory using a smartphone or a laptop remotely and in real-time.
Here’s a closer look at the technologies that make smart inventory management a reality. RFID systems consist of three main parts: RFID tags, RFID antennas, and RFID reader
An RFID tag has an ID that stores the data about the specific item it is attached to. It can be carried by any physical surface, raw materials, finished goods, cartons, packets, etc.
For an industrial environment, mainly passive tags are used, i.e. those that depend on external power sources, and are without their own power supply. Although such tags are not too costly, they require the power of the reader to be able to function.
An RFID antenna intercepts the signal waves from the reader to supply energy for tags’ operation and forwards the radio signal from the tags to the readers.
An RFID reader is a device that uses radio waves to read and write data from RFID tags. It can either be fixed or handheld. It can read data from numerous RFID tags without physical contact. The reader intercepts the information regarding IDs that are written in tags’ memory banks and sends it to the central server or cloud, along with the data about the readers’ locations and the time of readings.
Issues with traditional inventory management
Inventory management is one of the challenges in most industries. Keeping track of numbers and availability helps in improving work efficiency to great extent. Although entering data manually can lead to discrepancies. Some of the issues are listed below.
Absence of real-time inventory data
Manually updating spreadsheets for tracking inventory may lead to improper inventory management.
There is always a possibility that the inventory manager might forget to update a particular product arrival and repeat orders for the same might be placed. IoT helps avoid such lapses. IoT-based Inventory management helps in tracking the products and every inventory data in real-time.
Imprecise projection of demand and supply
It has been seen that manual inventory management is unable to precisely bridge the inventory and the demand gap. Additionally, it is unable to give any demand insights for the future or streamline data to analyze the trends. It is very important to achieve IoT-based inventory optimization to avoid piling non-essential stocks and increasing inventory load.
A centralized approach to business is very essential for a successful business. IoT-based inventory management enables you to update the data on all the devices as soon as you make a sale on a point-of-sale (POS) device.
Manual inventory management can not be scaled up and down as per need. On the contrary, an IoT-based inventory management system helps in the integration of cost-control methods, predictive trends, and process optimization.
Misplaced items in inventory
Manual inventory management may lead to loss of inventory which is avoidable. Using an IoT-based inventory management system, every item can be traced and tracked thereby eliminating the chances of inventory loss
The Internet of Things is rapidly changing the face of inventory management and the global supply chain. According to research done by McKinsey Global Institute, IoT can contribute immensely to potential inventory management, supply chain management, and logistics. In monetary terms, IoT’s impact on inventory management could reach anywhere between $560 billion and $850 billion per year by 2025.
How IoT improves inventory management
IoT is known to improve real-time communication in logistics and inventory management. Sensors and devices fixed to various inventory-related items help improve communication by real-time monitoring of data.
Precise, Detailed, Itemised, Location Monitoring
With IoT, one can pinpoint the location of every item in inventory. We can track its location, know the delivery status, transit status, expected time of arrival etc extremely accurately. All this information is available in real-time and vastly streamlines and optimises the inventory management process.
Itemised inventory tracking is carried out through warehousing and processing With IoT, the number of specific inventory items that can be tracked will increase massively.
Touchless Data Collection
The lesser human intervention the better it is for an inventory management system. With automated data collection of the inventory items, the presence in the inventory of every item can be ensured.
The use of technology-enabled by the IoT along with improvements in 5G wireless technology is proving to be helpful in improving the logistics of warehouse management.
Warehouse management is concerned with the optimization of the efficient utilisation of that space. Once the usage pattern is known, the available space in a warehouse can be better allocated.
More frequently used items can be stored more closely at the access points to improve warehouse efficiency.
IoT in inventory management enables the use of smart shelves and storage bins that can quantify the duration for which things have been held in those places and how full they are. This data can be sent to the server for analysis and actionable insights for better optimization of inventory space.
Suggested Reading: SMART IOT SOLUTION
Artificial Intelligence Algorithms
Artificial intelligence has given us the power of smart algorithms that can help us track and manage inventory many times better than what an average human can do. Careful analysis of IoT data by AI systems will help in identifying patterns that can’t be observed by a human. This process is bound to improve inventory management decision-making. Functions like replacement inventory orders can be better handled by AI-powered inventory management systems.
Equipment/Fleet Inventory Management
If a company’s inventory management system includes equipment and vehicle fleets, then in such a case, IoT is very useful. IoT-enabled tracking methods that use GPS locations to gather data about fleet or equipment transit status help in better management and utilisation of the tracked fleet reducing unauthorised access and optimising the process overall.
Better Management of Lead Times
IoT-based tracking of inventory using is crucial in determining the lead times required to assemble all the parts necessary for manufacturing. High lead times get pinpointed in order to avoid hurdles caused by a critical part(s) being missing and causing stoppages in the production processes. This helps in better synchronisation between production processes and inventory demand fulfilment.
IoT Integration with Robotics in inventory management
Inventory management using IoT lends itself to better and easier integration with robotics for various inventory processes. As an example, it has been seen that online retailers have to do substantial work in picking items to fulfil a customer’s order. Robotics can aid in the more efficient completion of customer orders with help from IoT-connected inventory goods and systems.
Switching to IoT for inventory management is a good decision for most companies. There are, however, some concerns that need to be taken care of before the full-fledged adoption of IoT for inventory management. These are:
- Investment cost
- Standards that help devices communicate with each other
Notwithstanding these issues, there has been a downward trend in the investment cost of IoT technology. Many organisations are seeing the immense financial benefits arising out of IoT-based inventory management and thus are adopting IoT for efficient inventory management.