Impact of IoT in Inventory
Internet of Things (IoT) has revolutionized many industries including inventory management. IoT is a concept where devices are interconnected via the internet. It is expected that by 2020, there will be 26 billion devices connected worldwide. These connections are important because it allows data sharing which then can perform actions to make life and business more efficient. Since inventory is a significant portion of a company’s assets, inventory data is vital for an accounting department for the company’s asset management and annual report.
Inventory solutions based on IoT and RFID, individual inventory item receives an RFID tag. Each tag has a unique identification number (ID) that contains information about an inventory item, e.g. a model, a batch number, etc. these tags are scanned by RF reader. Upon scanning, a reader extracts its IDs and transmits them to the cloud for processing. Along with the tag’s ID, the cloud receives location and the time of reading. This data is used for updates about inventory items’, allowing users to monitor the inventory from anywhere, in real-time.
The role of IoT in inventory management is to receive data and turn it into meaningful insights about inventory items’ location, status, and giving users a corresponding output. For example, based on the data, and inventory management solution architecture, we can forecast the number of raw materials needed for the upcoming production cycle. The output of the system can also send an alert if any individual inventory item is lost.
Moreover, IoT based inventory management solutions can be integrated with other systems, i.e. ERP and share data with other departments.
RFID in Industrial IoT
RFID consist of three main components tag, antenna, and a reader
Tags: An RFID tag carries information about a specific object. It can be attached to any surface, including raw materials, finished goods, packages, etc.
RFID antennas: An RFID antenna receives signals to supply power and data for tags’ operation
RFID readers: An RFID reader, uses radio signals to read and write to the tags. The reader receives data stored in the tag and transmits it to the cloud.
Benefits of IoT in inventory management
The benefits of IoT on the supply chain are the most exciting physical manifestations we can observe. IoT in the supply chain creates unparalleled transparency that increases efficiencies.
The major benefit of inventory management is asset tracking, instead of using barcodes to scan and record data, items have RFID tags which can be registered wirelessly. It is possible to accurately obtain data and track items from any point in the supply chain.
With RFID and IoT, managers don’t have to spend time on manual tracking and reporting on spreadsheets. Each item is tracked and the data about it is recorded automatically. Automated asset tracking and reporting save time and reduce the probability of human error.
Real-time data about the quantity and the location of the inventory, manufacturers can reduce the amount of inventory on hand while meeting the needs of the customers at the end of the supply chain.
The data about the amount of available inventory and machine learning can forecast the required inventory which allows manufacturers to reduce the lead time.
Remote product tracking makes it easy to have an eye on production and business. Knowing production and transit times, allows you to better tweak orders to suit lead times and in response to fluctuating demand. It shows which suppliers are meeting production and shipping criteria and which needs monitoring for the required outcome.
It gives visibility into the flow of raw materials, work-in-progress and finished goods by providing updates about the status and location of the items so that inventory managers see when an individual item enters or leaves a specific location.
Bottlenecks in the operations
With the real-time data about the location and the quantity, manufacturers can reveal bottlenecks in the process and pinpoint the machine with lower utilization rates. For instance, if part of the inventory tends to pile up in front of a machine, a manufacturer assumes that the machine is underutilized and needs to be seen to.
The data collected by inventory management is more accurate and up-to-date. By reducing these time delays, the manufacturing process can enhance accuracy and reduce wastage. An IoT-based inventory management solution offers complete visibility on inventory by providing real-time information fetched by RFID tags. It helps to track the exact location of raw materials, work-in-progress and finished goods. As a result, manufacturers can balance the amount of on-hand inventory, increase the utilization of machines, reduce lead time, and thus, avoid costs bound to the less effective methods. This is all about optimizing inventory and ensuring anything ordered can be sold through whatever channel necessary.