Happy Holidays: How IoT can make all participants in the supply chain happy

Christmas is right around the corner, and with it all the holiday traditions. Some of them you might have already noticed, like your colleagues bringing cookies and candies to the office, or your scale showing two pounds more than usual (most likely an effect of your colleagues’ cookies). But one of the most recognizable traditions can be seen in retail stores as they are loaded with overwhelming amounts of decoration, artificial snow and the most tempting holiday specials as far as the eye can see.

Like every year, retailers are expecting big revenue numbers. According to the American National Retail Federation, US shoppers are expected to spend 602 bn. USD during this holiday season (in Germany we are looking at 81 bn. Euros), but sales during the holiday season could even be higher. A new study by Capgemini shows us that companies struggle with satisfying real-time consumer demands during the holidays and consequently lose customers to other stores or brands. In fact, more than 50% of supply chain managers admit supply chain issues have had a negative impact on their company’s revenue or profitability over the past few years.

In the Internet of Things (IoT) era, however, retailers could profit enormously from real-time supply chain insights. IoT technology will provide for a better exchange of information by connecting supply chain participants as well as the assets, thus enabling all participants to act accordingly.

But let’s have a closer look at the different parties that would profit from a more connected supply chain, namely the consumers, retailers, transporters and manufacturers:

The consumer

Being at the very end of the supply chain will allow consumers to benefit first from better product availability at stores, due to an improved inventory accuracy coming from retailers using new technology. Another bonus for consumers are self checkouts, enabling them to purchase items anywhere in the market with their mobile device. A system like this is already in use at American Apparel using RFID technology.

The retailers

They could well be the big winners in this scenario. As described before, out-of-stock items impact business. According to the Capgemini report, 74% of the holiday shoppers have a certain gift in mind when going shopping for presents for their loved ones. It comes as no surprise that frustration is high if the desired item is out-of-stock. While most of them would try to find the item at another store, 29% would decide to not purchase the item at all. In order to gain real-time supply chain insights, retailers can use IoT technology to track items and increase inventory visibility. Being able to react to fluctuations and peaks in demands during the holiday shopping season will undoubtedly increase sales.

IoT provides many other solutions for retailers such as theft alerts and automated inventory management. Additionally, there are plenty of possibilities for retailers to offer new services for their customers in order to improve shopping experience and customer satisfaction, e.g. notifying customers automatically about items that are back in store.

The transporter

Having real-time market insights, transporters will be able to make more intelligent decisions.

Having real-time market insights, transporters will be able to make more intelligent decisions.

Transporters will be able to make more intelligent decisions because of the improved exchange of information between all participants in the supply chain. For example, while being in transit, the transporter could change the route and target the specific stores where products are required more urgently and skip stores where demand has not been as high as expected. Being able to deliver on an on-demand basis and having more efficient distribution processes, suppliers and transporters can stock fewer inventories, thus saving warehousing costs and the risk of being stuck with the goods.

The manufacturer

Getting real-time feedback from retailers about product purchases allows manufacturers to adapt production accordingly, optimizing output and minimizing excess production. Knowing about trends ahead of time gives manufacturers the opportunity to ship popular products right on time, translating into increased profitability for both the manufacturer and retailer.

One key point affects all participants in the supply chain: A more dynamic adaptation to market trends and needs will save time, energy, and consequently the environment.

This list of benefits is by far not complete, but I hope it gives you an idea of how much more efficiently the supply chain could be in an IoT world.

As for me, I am excited about this trend, especially when thinking of the coming days where I will be running from store to store trying to get presents for my loved ones, but what are your thoughts and expectations? What services would you like to see being offered by retailers?


About the author

Alexandra Sciocchetti

Alexandra Sciocchetti

Alexandra Sciocchetti had been with Bosch Software Innovations as marketing manager for Industry 4.0 and covered topics that deal with the future of manufacturing and logistics, and how the Internet of Things will change these industries. Alexandra was a regular contributor to the Bosch ConnectedWorld Blog till May 2015.