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IoT in Inventory Management: Advantages and Challenges

Time to read: 6 minutes

In today’s very competitive eCommerce landscape, online businesses constantly look for ways to boost productivity and reduce costs. IoT in inventory management is one area with much space for development.

Traditional inventory management, which is manual and time-consuming, can result in erroneous data and stockouts. The Internet of Things (IoT) can help organizations automate and streamline inventory management. It lets them access real-time data and insights that can be used to optimize their inventory levels and boost profitability.

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Supplier networks become robust when more data is transmitted faster and more accurately across supply chains. According to Gartner, the world’s top-performing supply chains use IoT and predictive analytics in full production environments. IoT is transforming these top-notch supply chains in every way.

As physical goods move through the supply chain, they are integrated with smart sensors as part of the IoT in the inventory management ecosystem. These smart sensors use the internet to communicate real-time updates such as location, temperature, humidity (if used for cold storage), handling speed, and other aspects.

IoT in inventory management automates and streamlines tedious, time-consuming, and prone-to-human error traditional inventory tracking. The flawless real-time connection between RFID tags and sensors makes spotting bottlenecks easier, boosting productivity and shortening lead times.

In an inventory management system that uses IoT and RFID technologies, an RFID tag is attached to every inventory item that needs tracking. An inventory item’s model, batch number, and other relevant information are encoded digitally and contained in each tag’s unique identification number (UID).

These tags are scanned using RFID readers. An RFID reader collects data on the tags’ IDs when an RFID tag is checked. Then, it sends this information to the cloud for processing.

The reader’s location and exact time stamps the moment data is recorded are also provided to the cloud. Based on this information, the cloud delivers the object’s location with the matching ID. Afterwards, it generates a visual output of the results and displays real-time changes.

More online merchants use cutting-edge tools like live dashboards and intelligent shelves to manage and maintain their inventory in real-time. Doing so ensures top-selling items are never out of stock and effectively meet changing seasonal demand.

Why You Need IoT In Inventory Management

The Internet of Things is a ground-breaking innovation accelerating the intricate digitization of manufacturing facilities.

IoT is transforming the daily operations of online businesses. Developing a smart inventory management system to track and monitor assets in real-time is now possible, ensuring stock is always available. IoT in inventory management through devices such as sensors and GPS devices, make this possible. In addition to increasing efficiency, this can lower expenses by reducing overstocking and stockouts. 

IoT-driven Inventory Management: A Quick Guide (

Improved Overall Visibility

Your business can have total visibility into its inventory quantities, locations, and status at all times, thanks to real-time inventory tracking. This visibility allows for better decision-making, decreasing stockouts, preventing overstocking, and enhancing inventory management.

Critical Inventory Data

Traditional inventory tracking techniques rely on labor-intensive manual data entry or sporadic audits, causing delays and inaccuracies. IoT in inventory management can automate data collection, resulting in precise and current inventory data. Improved order accuracy, fewer discrepancies, and greater customer satisfaction result from this accuracy.

Greater Efficiency & Productivity

Thanks to real-time inventory tracking, manual counts and physical searches for inventory goods are no longer necessary. This simplifies the inventory management procedures, lessens the amount of manual labor, and frees up staff for higher-value work. Efficiency, production, and cost savings all increase as a result.

Faster Replenishment and Competitive Demand Planning

eCommerce businesses may proactively recognize low-stock situations and prompt immediate replenishment with real-time visibility into inventory levels. It eliminates sales losses, cuts down on stockouts, and optimizes inventory levels based on changes in demand. Reducing carrying costs and improving customer service are two benefits of accurate demand planning.

Better Collaboration

Real-time inventory management makes it easier for supply chain partners to work together seamlessly. Suppliers, manufacturers, distributors, and retailers can synchronize production, improve logistics, and boost supply chain effectiveness using precise and real-time inventory information.

Regarding inventory management, we also have to consider warehouse management. Warehouse errors can be expensive. Roadblocks and inaccurate operations will also require extra labor, incurring unnecessary expenses. IoT devices can improve processing speeds and overall warehouse efficiency while reducing manual labor and error rates. Businesses are putting IoT sensors in their warehouses to track the use and movement of materials and other assets inside their facilities. Additionally, eCommerce companies are integrating sensors on shelves to send their management system real-time inventory data. 

By ensuring inventory levels and equipment placements are precisely tracked and continually monitored, IoT and smart warehouse management can help eliminate costly and time-wasting mistakes.

Understanding the Challenges of IoT in Inventory Management

Networks of supply chains are changing quickly due to technology. The biggest problem for inventory management is when there isn’t enough information to make an informed choice. Using IoT devices to replace outdated inventory management systems increases efficiency by enabling better tracking, traceability, quality control, and compliance.

Over the past few years, warehouses have become crucial business centers that boost supply chain efficiency and speed. IoT devices are now being used by several businesses to control inventory. However, there are issues with IoT deployment that need to be considered. Companies must consider the investment cost, security, and scalability when incorporating IoT devices into their systems.

IoT in Warehouse Management — Smart Warehousing Guide – CodeIT

First and foremost, it’s crucial to ensure that installing RFID tags doesn’t interfere with your regular production processes. RFID installation is time-consuming because this is an essential aspect of IoT in inventory management.

Another potential issue is scanning, which could be challenging, especially when dealing with materials like liquids and metals. You can encounter inaccurate readings when your staff attempts to check past such barriers. Additionally, the initial cost of IoT equipment implementation is relatively high. While analyzing whether the finished product is practical enough to justify the paid charges, all company expenses should be feasible.

Utilizing technology reliant on connected networks and the internet makes it susceptible to cyberattacks. Business owners must take proper security precautions to safeguard their systems. Fortunately, many solutions offer improved cybersecurity, including blockchain-based IoT applications with numerous levels of security.

Despite these reservations, the cost of IoT technology continues to drop as the number of inventory management IoT interfaces becomes widespread. IoT devices are quickly replacing traditional inventory management methods as an affordable and effective option for many enterprises. IoT devices generate a lot of real-time data, which businesses use to enhance supply chain, inventory, and logistics operations.

Implementing IoT in Inventory Management

You should adhere to several best practices to enable IoT’s most effective and secure usage in inventory management and logistics. Determining objectives and KPIs and picking the best IoT platforms and devices are parts of the process. But it also includes testing and verifying solutions and monitoring and enhancing them. Before implementation, you should decide on your goals and KPIs, ensuring they align with your company’s goals and clients’ expectations. 

Be sure to check the compatibility of the IoT devices with your current inventory management systems. Real-time tracking and reporting should have a seamless connection, enabling smooth data flow between IoT devices and the inventory management system.

IoT device placement is essential to ensure reliable data collection. Devices, such as barcode scanners or RFID readers in critical areas should be placed strategically to acquire accurate data. It is important to follow installation instructions to guarantee optimum reliability and functioning.

Here are some practical ways of using IoT for inventory management aside from RFID’s:

Weight Sensors

Weight sensors placed beneath merchandise bins can monitor inventory levels and automate inventory counts. It can start replenishment when minimum levels are reached with touchless IoT technology. Remote management of weight sensors is possible from remote locations. Cardboard boxes, registration plates, fasteners, medical supplies, and even hotel linens can automatically be replenished.

Electronic Shelf Labels

Low-energy Bluetooth beacons on electronic shelf labels (e-labels) allow for two-way communication regarding any product.  Users can initiate an order by pressing a button on the e-label.  After receiving the order signal, suppliers can inform the tag that the item is on order to stop further procurement. The tag also includes details about the vendor and the product. 

Inventory management is being transformed by IoT every day with increased intelligence and efficiencies. IoT technology is assisting eCommerce businesses in staying relevant in the fiercely competitive and constantly evolving online market. IoT enables online merchants to gain a competitive edge by transforming inventory management into a strategic asset and value driver. 

ZhenHub has the tools to make your eCommerce business IoT-ready. With tech-driven solutions, you can upgrade your inventory management and receive real-time stock updates. Strategic planning is easier when you have access to the correct data. Get instant access when you sign up at our website.

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