Manufacturers have started implementing features of the Fourth Industrial Revolution (4IR) to be more flexible and responsive and make more intelligent, data-driven decisions. One of the technologies of the 4IR is the Internet of Things (IoT). Manufacturing can not only use IoT for manufacturing, but also to give inventory management greater flexibility and improve decision-making.
IoT works by harnessing a connected mesh of devices with computers that enable the devices to communicate. Using this to track goods in real-time in warehouses and throughout the supply chain can save time, improve warehouse efficiency and prevent stock-outs.
How IoT works with inventory
With inventory management being a key factor in profitability and cost containment, active inventory management is essential. How much inventory a company holds depends on demand factors, supplier lead times, manufacturing capacity, and stock-holding policies. In many cases, these are slow manual processes. However, if IoT is used for inventory management, much of the information could be accessed in real-time for better and faster decisions.
As part of an ERP system, this data can be centralized, allowing for a single source of truth that the whole enterprise can use to improve efficiency, reduce waste and cost, and provide better customer service.
Six benefits of IoT for inventory management
- Determine inventory availability
Businesses can get detailed, real-time insights into inventory in various locations. This includes visibility into stock levels and status, which improves decision-making, prevents shortages and overstocking. In a crisis, information at this detail could be crucial. - Automated replenishment
IoT sensors can trigger replenishment orders when inventory levels drop below a predefined threshold, automating replenishment in the ERP to prevent stock-outs as well as optimizing inventory levels. - Supply chain optimization
IoT data can be used to optimise supply chain operations, including transportation, warehousing, and distribution. By monitoring inventory levels and locations throughout the supply chain, businesses can make more informed decisions about logistics.Real-time inventory data can improve collaboration across the supply chain. The participants in the supply chain — manufacturers, suppliers, distributors — can use the information to coordinate delivery with production schedules, and enhance logistics to boost overall supply chain efficiency. - Enhanced warehouse management
Using IoT sensors to track the location of items within a warehouse can optimize storage space, identify stock that will expire, and improve picking efficiency. Inventory counts are updated automatically, reducing the need for manual stocktaking. - Improved Decision Making
Storing real-time data from IoT devices in an ERP system can help to identify trends, predict demand, and make informed decisions about inventory management. - Better efficiency and productivity
Using IoT for manufacturing in inventory management reduces manual stock reviews and speeds up searching for inventory items. Allowing staff to concentrate on higher-value tasks improves performance and productivity, leading to cost savings.
Pre-requisites for using IoT with inventory
Before a business can adopt an IoT-based inventory management system, it must have the necessary infrastructure.
Manufacturing ERP
IoT for manufacturing is creating data at an exponential rate. The ability to manage this flood of data is becoming critical. The answer to overcoming the data deluge can be found in the adoption of a manufacturing ERP system. An ERP enables the automation of processes and provides the tools for inventory management. It can be used to deliver up-to-date information on critical business processes and allows streamlining of the inventory management process.
As well as benefiting the organization internally, the ERP system can share data across the entire business ecosystem. By doing this, manufacturers can unlock additional value and accelerate innovation.
Cloud infrastructure
Most manufacturers will not have the on-premise systems or infrastructure to handle IoT data. A cloud service like the Microsoft Azure IoT Hub can be used as a management service to handle IoT devices. This service connects to all IoT devices wherever they are and provides a unified, central location where devices can be configured, turned on or off, settings changed, and firmware updated.
A manufacturing ERP that supports IoT for manufacturing will have a message queue service and a queue data structure to manage IoT messages from an IoT Hub. In addition, the ERP should have a service to aggregate and analyze the IoT data received, and structure the data in a meaningful format that can be used to provide analysis and empower accurate and real-time decision-making.
Using IoT to manage inventory in an ERP
The digitization of the manufacturing process using IoT is a long-term project. To benefit from IoT for manufacturing, an ERP system can prepare a manufacturer for the changes. Adding inventory to the IoT project will further improve the benefits to the project.
