Blog Article

The Internet of Things (IoT) and Your Supply Chain

Wearables, smart appliances, thermostats, and more are becoming commonplace. These are all part of the Internet of Things (IoT) — the ecosystem that’s poised to transform our day-to-day personal and professional lives. But what exactly is the IoT?

In short, the IoT refers to the many internet-connected devices that sense, collect, and communicate real-time data about the environment around them. This type of monitoring and measuring has many areas of application, such as location tracking, temperature control, and, of course, supply chain and inventory management, among many other things. The list of IoT devices gets longer every day. According to market research company, IDC, there will be 41.6 billion IoT devices in use by 2025.

How Does the IoT Impact the Supply Chain?

First and foremost, the IoT helps collect data, and data is king. Having accurate data at the right time is crucial to helping your company plan for demand and provide excellent customer service. Yet while performing data analytics using the IoT can be very helpful when forecasting, the IoT is more often used by supply chain professionals to sense and react to changes in demand and inventory. This is especially true when paired with a powerful demand planning solution, like Atlas Planning.

Our client, Reddy Ice, supplies packaged ice products to grocery and convenience stores across the United States. John Galt placed sensors in their iceboxes to monitor how much ice is held there at any given time. This data is transmitted to Atlas every 30 minutes throughout the day and used to project when those iceboxes will run out of ice.{{ script_embed('wistia', '55fddapann', ', ', 'inline,responsive') }}
Grant Daniel, Director of Delivery Optimization at ReddyIce, discusses how Atlas Planning transformed the way they deliver ice to customers. 

That way, replenishment-related decisions (e.g., frequency, quantity and routes) can be made appropriately and adjusted as needed. Also, the near real-time nature of those data updates helps to quickly identify anomalies that a projection would not have anticipated, such as a spike (or drop) in demand from customers. For example, a forecast may tell us an icebox is projected to run out in 3 days, but it cannot account for a particular customer that decides to buy all the remaining ice at once. This is where the value of IoT really pays off. By helping customers make adjustments on the fly, we can minimize delayed shipments and stockouts.

Who will Benefit Most from the IoT?

While all companies can take advantage of the IoT to make their supply chains more efficient, it’s not a fit for all businesses. There are a few types of companies that benefit most of IoT technologies:

  • Businesses that don’t have point of sale (POS) data.
    The absence of up-to-date, accurate sales data poses a challenge for inventory planners. It’s hard to plan restocks when you don’t have reliable estimates of inventory remaining. Data collected from the IoT will drive the replenishment decisions instead.
  • Businesses with locations far from a distribution hub.
    The longer the distance to transport goods from point A to point B, the higher the cost. That’s why remote locations need replenishments that are timed as close to perfect as possible. If a store 10 miles from a warehouse runs out of inventory, it’s inexpensive to replenish since there’s always a truck nearby. But a store 100 miles away is much more costly to restock. Using data collected from the IoT, companies can better optimize replenishments while accounting for transportation costs.
  • Businesses with perishable goods.
    Intel estimates that 30% of perishable produce spoils before it gets to the customer. In 2011, the UN estimated that about a third of food produced for human consumption is lost or wasted. Sensors placed in shipping containers help monitor and control shipping conditions to reduce food waste and unnecessary costs.

The Costs of IoT

Employing a supply chain management strategy that fully utilizes the IoT requires a significant upfront investment and ongoing costs. These may include:

  • Purchasing and installing sensors or other internet-connected devices · Building a solid data infrastructure model that has minimal downtime and can securely and privately transmit data through WiFi, Bluetooth or other means.
  • Demand planning and other supply chain management software that can collect, store, and analyze the data so that companies can derive actionable insights from the IoT data stream.
  • That may sound daunting. But for many companies, it’s worth the investment. When combined with advanced software tools, the Internet of Things enables greater visibility into the supply chain, which helps you gain a competitive edge.

For more information about supply chain management best practices and what steps you need to take before making that leap into a “smart” IoT-connected supply chain, schedule a free consultation with one of our Demand Planning Xperts today. Our Atlas Planning and ForecastX solutions can help you Walk-Drive-Fly into properly incorporating the IoT across your supply chain.

About John Galt Solutions

More than ever, companies must be able to sense and respond to the dynamics of a complex supply chain. John Galt's Atlas Planning is a unified end-to-end supply chain planning platform that helps you increase forecast accuracy, optimize inventory levels and maximize supply chain performance. Since its founding in 1996, John Galt Solutions has built a proven track record of providing affordable, automated demand and inventory management services for consumer-driven supply chains. We have an unmatched ability to configure tailored solutions for customers, regardless of size, industry, or business challenge, that save both time and money by compressing implementation periods and delivering intelligent information that positively impact your bottom line.

To learn more about John Galt Solutions, contact our press office at 312-701-9026 or visit