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Pros and Cons of Implementing IoT in Supply Chains

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Pros and Cons of Implementing IoT in Supply Chains

IoT is a no-brainer for supply chains, so let's take a look at what benefits they offer, but also some of the challenges involved in implementing connected systems.

· IoT Zone ·
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Incorporating IoT can solve a number of problems faced in the supply chain. For instance, sensors can be tagged on every product or shipment which will allow interested parties to track items throughout the product cycle. This is especially crucial in the retail sector, where efficient inventory management is necessary to avoid situations relating to stockouts, stock obsolescence and futile trade marketing efforts. With real-time tracking of inventory, businesses can be managed effectively and efficiently through the insights received from the supply chain process. This also helps in effective decision making, proper fund management, accountability, maintaining customer and vendor relations, etc. Essentially, IoT offers the following benefits to supply chain:

  • End-to-end visibility of products

  • Stock management

  • Higher reliability of operations

  • Sales data insight

  • Improved profitability

Discovery and Tive are two such companies which are seeking to disrupt the traditional supply chain with their IoT solutions. Discovery is building an IoT network for supply chain and is creating a printable self-charging IoT tag, called Cliot, priced at $0.10 which utilizes backscattering technology to power itself up. In addition, it is also being built to support a number of sensors such as IR, accelerometer, temperature sensors etc. Besides, utilizing edge computing, Discovery is creating a highly scalable network, where, their tag transfers data to nodes in the network formed by a community of smartphone users, this data is then processed on smartphones and thereafter uploaded on the cloud.

DiscoveryIoT supply chain solution technology

On the contrary, Tive utilizes a tracker that houses multiple sensors for sensing motion, temperature, etc., which transmit data using a cellular connection to the cloud to be processed further and receive insights into the data. As seen above, such solutions resolve the existing issues relating to the supply chain by addressing all concerns related to visibility, inventory management, supplier networks, fluctuating customer demands etc. For instance, Nestle could tag each chocolate produced by them and with the help of powerful analytics tool, they could see the Consumer Purchase Data across all markets and strategize their production and business in a much more effective manner, thereby, boosting their net revenue. Authentic insights into Consumer Purchase Data and behavior can assist them in making effective marketing campaigns. This can take away the need for traditional data and other time-consuming approaches of market research.

Despite all the advantages and ease of business that IoT provides for supply chain industry, there are also certain challenges in implementing them. As IoT is not a matured technology yet, some of the issues faced in its implementation may also be unanticipated.

Skill Gap

In a report by BPI network, based on a survey of 350 executives, 90% of the respondents mentioned that Industrial IoT(IIoT) is a strategic focus whereas only 9% said that they began a widespread adoption of IIoT. In the survey, 60% of the executives cited major skill gap to be a major reason for such a dismal state of IoT adoption. As IoT requires multiple skill sets such as data analytics, hardware expertise, embedded software development, app development and etc., it is not surprising that relevant skills are hard to find. In a report by Canonical, the maker of Ubuntu, it was found that 68% of businesses struggle to find the right talent for IoT.

Managing Data

IoT's attractiveness lies in its ability to gather a large amount of data and provide unprecedented visibility into processes. Although, getting data isn’t the sole reason for implementing IoT, storage, and analysis of data is what makes the data useful. In order to extract IoT's complete usefulness in the supply chain, there need to be efficient data handling systems in place. In essence, sophisticated data management tools are necessary to gather data and make sense of what is received from the numerous sensors.


Anything that has to do with network communication is susceptible to hacking and cyber attacks. As supply chain is a large part of every industry, widespread adoption of IoT also risks critical security issues. In the event of a cyberattack on an enterprise's supply chain, complete operations can come to a standstill causing enormous revenue loss for enterprises. The 2016 Dyn cyber attack was a blot to IoT and is still a reminder of the vulnerability posed due to connecting things through the internet.


At a time when market competitiveness is extremely high, business strategies need to incorporate innovative as well as creative ways to stay relevant. Supply chain being a major component of every consumer based industry; bringing innovation to its management will undoubtedly increase the competitive edge of any enterprise. IoT is one such solution that can drastically improve supply chain management by providing numerous benefits, which in turn would bolster any company's business. As consumer trends and their preferences change over time, consumer product cycle shall also adopt those changes and hence, smart and efficient solutions are enabled by incorporating technologies like IoT.

internet of things ,supply chain

Opinions expressed by DZone contributors are their own.

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