Modern-day companies are constantly seeking ways to streamline their operations and enhance efficiency. One often overlooked area is inventory management, which is crucial for any business dealing with physical goods.
According to recent research, only 36% of manufacturers use inventory management software, with the remaining 64% relying on error-prone Excel spreadsheets or manual paper-based methods. Companies lose an average of 22 hours per month writing down inventory details and entering information into spreadsheets. However, labour-intensiveness is one of many issues. A research study conducted by MarketWatch estimates that around 88% of spreadsheets contain errors, which compounds the challenges.
Fortunately, with the advent of the Internet of Things (IoT) and Radio Frequency Identification (RFID) technology, manufacturers can overcome the limitations of traditional methods and gain real-time visibility into their inventory.
In this guide, we will explore the significance of incorporating IoT in inventory management and its numerous benefits and practical applications.
Why do you need IoT in Inventory Management?
Traditional inventory management is a reactive process. Businesses rely on periodic manual checks or point-of-sale data to determine stock levels. This approach often results in stockouts or overstocking, which can have detrimental effects. Stockouts create frustrated customers and lost sales, while overstocking ties up valuable capital in underutilised inventory.
IoT in inventory management transforms this reactive approach into a proactive one. By integrating sensors and tags into inventory items, businesses gain real-time insights into stock levels, location, and even environmental conditions such as temperature or humidity for perishable goods.
This automation of inventory enables:
- Automated reordering: When the stock reaches a predefined threshold, it triggers an automatic reorder, eliminating the risk of stockouts.
- Improved forecasting: Real-time data on inventory movement allows for the creation of more accurate demand forecasts, optimising inventory levels and reducing storage costs.
- Enhanced traceability: Knowing the exact location of every item within the supply chain allows for faster fulfilment and better response to customer inquiries.
- Reduced shrinkage: IoT inventory management systems can help identify and prevent theft or loss of inventory.
The Technology Powering IoT in Inventory Management
At the heart of an intelligent inventory approach lies a network of interconnected devices and technologies that collect and exchange data. These devices work in tandem, serving as a cornerstone in enabling real-time asset tracking and inventory visibility.
Key technologies enabling IoT in inventory management include:
RFID Tags: These small electronic devices affix to inventory items, enabling unique identification and tracking through radio frequency signals. Depending on the application, RFID tags come in various forms. Some are passive and rely on the reader’s energy field for power, while others are active and equipped with their own battery power for long-range data transmission.
RFID Antennas: As conduits for radio frequency signals, RFID antennas facilitate communication between RFID tags and readers. They can be strategically placed throughout a warehouse or retail space to capture data from tags as they move within range. There are various antennas, each with varying read ranges and capabilities.
RFID Readers: As the interface between RFID tags and the central inventory management system, RFID readers capture and process data transmitted by RFID tags. These readers come in fixed or handheld options, offering data collection and monitoring versatility.
Sensors: Besides RFID tags, the IoT inventory management system can integrate various sensors. These sensors can track environmental conditions like temperature, humidity, or vibration, ensuring optimal storage conditions for sensitive items.
Software Platform: A cloud-based software platform aggregates and analyses the collected data from RFID tags, sensors, and other devices. This platform provides real-time insights into inventory levels, location, and other relevant data points. It also allows for setting reorder points, generating reports, and managing the entire inventory ecosystem.
These technologies work together seamlessly to create an intelligent inventory management system. As items move through the supply chain, data is continuously collected and analysed, providing businesses a clear picture of their inventory in real time.
What are the Benefits of an IoT Approach?
Implementing IoT in inventory management offers numerous advantages over traditional methods. Its far-reaching impact can significantly improve a company’s bottom line.
Increased Efficiency and Productivity: Automating manual tasks such as data entry and stock checks frees up employees’ time for higher-value activities. Real-time data enables faster decision-making and improved workflow throughout the supply chain.
Improved Accuracy: Automated data capture minimises human error, ensuring precise and up-to-date inventory records.
Reduced Inventory Costs: With accurate data on stock levels, businesses can minimise the risk of overstocking, which ties up capital and consumes valuable storage space. IoT inventory management also helps prevent stockouts, reduce the need for emergency purchases, and prevent potential price markups.
Improved Customer Satisfaction: Businesses can provide a superior customer experience by ensuring stock availability and faster fulfilment times. IoT-based tracking also allows for better order status updates, keeping customers informed and reducing inquiries.
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Enhanced Loss Prevention: Real-time tracking of inventory items throughout the supply chain helps deter theft and loss. IoT systems can trigger alerts for unauthorised movement or unexpected changes in location, allowing for immediate action.
Data-Driven Decision Making: The wealth of data collected by IoT sensors and RFID tags provides valuable insights into inventory trends, demand patterns, and supplier performance. Businesses can use this data to optimise purchasing decisions, negotiate better deals with suppliers, and enhance inventory management strategies.
Improved Supply Chain Visibility: IoT inventory management offers a clear view of stock movement across the supply chain, from raw materials to finished goods. This allows for better collaboration between partners, faster identification of bottlenecks, and proactive management of potential disruptions.
Scalability and Flexibility: Designed to be scalable and flexible, IoT inventory management systems allow businesses to start small with a pilot project and expand as needs evolve. This enables them to enjoy the benefits of IoT without a significant upfront investment.
An Example of How IoT in Inventory Management Works
Let’s imagine a scenario where a company manufactures bicycles. By implementing an IoT inventory management system, the company can:
- Embed RFID tags on each bicycle frame as it comes off the production line.
- Place RFID readers at strategic locations throughout the warehouse and distribution centre.
- Equip delivery trucks with RFID readers to track inventory in transit.
As each bicycle progresses through the supply chain, the RFID tags communicate with the readers, transmitting real-time data on location and status. The software platform collects and analyses this data, giving the company a comprehensive view of its inventory levels at any time.
When bicycle stock at a retail store reaches a predefined minimum level, the system triggers an automatic reorder, ensuring a seamless flow of inventory and preventing stockouts. The company can also use historical sales and seasonal trends data to optimise production planning and ensure it has suitable bikes in stock to meet customer demand.
This example illustrates just one-way businesses can leverage IoT in inventory management. Its applications extend across various industries, from pharmaceuticals and food and beverage to retail and manufacturing.
Revolutionise Your Inventory Management with Neologix
The world of inventory management is undergoing a significant transformation driven by IoT technologies. By embracing IoT in inventory management, businesses can gain real-time visibility, optimise stock levels, streamline operations, and achieve substantial cost savings and improved customer satisfaction.
At Neologix, we specialise in helping businesses implement a bespoke IoT inventory management solution to meet their unique recruitment needs. Our team of experts will guide you in choosing the right technologies, seamlessly integrating them with your existing systems, and devising a strategy that optimises your inventory management for maximum efficiency and profitability.
Don’t let outdated inventory management practices hold your business back. Contact Neologix at info@neologix.ae or +971-521043226 to discover how IoT can revolutionise your operations and propel you towards success.
