7 Potential IoT-Powered Inventory Management Benefits for Small Businesses

25 March 2021

The benefits of the Internet of Things (IoT) on the supply chain are perhaps the most exciting. We explore several ways this novice technology could revolutionize inventory management and why small businesses must pay attention.

internet of things

As businesses grow, owners feel pressured to focus more on the day-to-day running of the enterprise. And mundane tasks such as inventory management gets pushed aside. In fact, according to the US Small Business Administration (SBA), 46% of small businesses with 11 to 499 employees don’t have any inventory system.

Not having an effective inventory system is a costly mistake for your business. Why? Because too little inventory is associated with missed sales and lost customers. 

On the other hand, too much inventory can lead to illiquidity, high warehousing cost, and tied-up funds. Since inventory has a limited shelf-life, you could eventually lose the tied-up funds.

7 Ways Small Business Can Leverage IoT for Smarter Inventory Management

The Internet of Things (IoT) offers a lifeline to small businesses struggling with inventory management.

The following are several ways small businesses can use IoT devices and technologies for better inventory management;

             1. IoT for increased inventory visibility 

The most successful businesses create systems to enable complete inventory visibility. They know all the products, missing items as well ordered consignments.

Advanced monitoring using IoT solutions gives small businesses a lot more visibility than using other traditional systems. For instance, you can track virtually every item in your inventory, wherever they are. Better still, IoT solutions offer real-time tracking to provide you with the most up-to-date information on your inventory.  

             2. Increased warehouse efficiency 

Inventory management controls at the warehouse are not only labor-intensive but also complicated. From receiving goods to picking and even packing, it’s quite demanding. Yet, you’re required to manage the tasks without error. 

IoT devices and the growing bandwidth offered by 5G technology are proving crucial in boosting warehouse efficiency. When used alongside smart shelves and storage bins that communicate stock levels in real-time, IoT devices allow you to identify usage patterns. As a result, your business can streamline operations between warehouses and various logistics providers.

            3. Better demand prediction for greater profitability 

Thanks to the more competitive market, the contemporary customer is fussier than ever before. More importantly, comparison shopping tools allow customers to hunt for discounts and bargains more easily. To meet these soaring expectations, you must predict the demand swings, whether personal or driven by special promotions.

And IoT offers excellent forecasting solutions. Real-time analytics allow organizations to pick up on market trends and position their businesses for profitability. You can determine which items are selling more to allow you to keep just enough inventory order.

            4. Reduce shrinkage and obsolete stock 

According to the Industrial Supply Magazine, obsolete (and excess) stock costs the average business 25% yearly. If you begin the year with $100,000 of obsolete stock, the inventory will cost your business $25,000 by the end of the year due to shrinkage, damage, storage, and the cost of money.

The Internet of Things allows businesses to track items using various factors. One of them is tracking expiry dates to prevent spoilage and waste. Besides, close monitoring also prevents theft and loss of items by providing every item’s location at any time.

            5. Savings from enhanced employee safety 

Employers pay $1 billion per week in worker’s compensation alone. That’s before accounting for the cost of lost productivity and potential replacement costs. 

According to OSHA, by the time employers calculate all the costs related to working injuries, they’re usually $192 billion short per year. Although the Internet of Things can’t curb accidents, it can go a long way in proactively addressing potential safety concerns. 

IoT can bring in automated material handlers instead of people for specific tasks, thus eliminating the risk of injury. Even when humans are involved, the sensors embedded in the machines can alert users of potential risks in real-time. 

For example, simple controls such as high-speed doors can now capture real-time events and send safety alerts when something is wrong through IoT sensors. 

          6. IoT helps ensure regulatory compliance. 

Compliance with company regulations and federal law is another area where IoT can help. Up to recently, organizations have depended on spreadsheets to manage inventory compliance. 

Often, you’ll find firms using excel sheets to track the systems in scope. The approach can work at the beginning. However, over time, mainlining the spreadsheets becomes a challenge.

IoT, when used alongside blockchain technology, offers a lasting solution to this problem. The two offer greater visibility into the inventory and better tracking for faster, more straightforward compliance assessments.

          7. Supply chain streamlining benefits 

For a long time, the supply chain’s siloed nature has caused businesses unending headaches. When you have a siloed supply chain, it takes longer than expected to accomplish tasks. Even worse, working in silos increases supply chain costs and labor requirements.

Automation is the first step to streamlining the supply chain. It reduces effort while increasing productivity, efficiency, and accuracy. The Internet of Things is at the heart of every successful supply chain automation process.

Improve your Inventory Management Today

According to a recent McKinsey Global Institute study, IoT’s contribution to inventory management, supply chain, and logistics could reach $850 billion by 2025. 

Therefore, if you’re not using IoT to track inventory, your business is at the risk of lagging behind the competition. 

It’s high time you invest in IoT technology to enjoy the benefits of a sound inventory management system. Contact NIX Solutions today to learn ways to implement IoT in your organization and take full control of your inventory system.