Impact of IoT in Retail Supply Chain Management


The Internet of Things arrived at the doors of Technology about 15-16 years ago, playing the role Green Revolution had played in harnessing the powers of land. Gartner predicts that by the year 2020, we would see “more than half of major new business processes and systems incorporate some element of the Internet of Things”. Internet of Things has spread its wings through a range of industries including health-care, agriculture and transportation. In what way does Internet of Things impact the retail supply chain management? The prophecies of the impact of IoT on retail supply chains conjure images of personalized virtual shopping trips, long-distance communication with one’s devices and Smart Stores. Standing as testimony to the fact that we are well on the way to actualizing these prophecies is the finding that about 72% of retailers are already implementing some form of IoT-related project.


What are the current trends that dominate IoT’s influence on retail supply chain management? Here are five ways in which Internet of Things is transforming retail supply chain management:


In transit visibility

Internet of Things has emerged with two innovative ways of interacting with products which are on the move: Radio Frequency Identification (RFID) and cloud-based GPS.


Radio Frequency Identification (RFID)

Once devices are connected through Internet of Things, it will be essential to gather real-time information about their operations. This can be executed by Radio Frequency Identification (RFID) where each item is attributed a tag which can be automatically recognized by electromagnetic fields. RFID can be applied variously for smart fitting rooms, no-swipe ticket passes, robbery-proof chips in casinos and no-waiting vehicle returns at car rentals among other general uses.

In the retail supply chain management, RFID allows us to have actionable data which can help in making consistent changes to improve the supply-demand efficiency.

Here are some numbers to exhibit IoT’s positive impact on retail supply chain management through RFID:

  • Distributors and manufacturers who have implemented RFID on their supply chains have witnessed over 75% enhancement in their shipping-picking accuracy;
  • On an average, companies which have applied RFID have found their inventory count accuracy move from 63% to 95%; and
  • Manufacturer can amplify their inventory count rates from 200 to over 12,000 items every hour with RFID.


Cloud-based GPS

Apart from the RFID, Internet of Things would also allow us to use cloud-based GPS which would pin down the identity of your products. Once the data is collected, it can be used for automating the shipping and delivery after prediction of the expected time of arrival. Depending on the kind of product being transited across, one can include other details like temperature and also measure the environmental conditions like weather and traffic news. Being armed with such information would help the companies to make data-driven decisions, that would enhance the productivity as a whole.


Procurement and pricing

As the real-time data on use of products flows in, your procurement team will know the items being used continually and which ones are in demand. This can be used to enhance the content of your catalog and also to skillfully manage the expenditure. While IoT will help with the procurement processes, the company must make sure it does not shoot up the operating and administrative spends. The power to adjust prices of a product by analyzing the purchasers’ trend will lie within the clicks of even store managers.


Inventory tracking

When the production of items is complete, the products are packed into cartons and generally sent across to warehouse of the buying companies in cartons. Managing the whereabouts of thousands of cartons at the same time is a complex process. Not only does such a management involve making sure the cartons are categorized and placed properly but that the treatment of each carton is determined by the type of product within it. With the RFID technology inherent to each cargo unit, the information about its movement would be automatically recorded on the read-write equipment registers and sent to the back-end structures. If the read-write equipment is positioned in the warehouse itself, then the activities within the house can also be registered.

Thus, when IoT is applied to retail supply chain management, we come across the extensive use of RFID products which allow for quick locating of the items, for the ability to record the losses accurately and the capacity to place products with strategy.

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Author : Sahana Rajan Date : 27 Jul 2016