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How the Internet of Things is transforming Logistics

February 18, 2022
7 min
IoT in Logistics

In any discussion of the Internet of Things, logistics has to be named among the top industries that have adopted and widely applied this technology in everyday business activities. In this article, we’ll analyze the role of IoT supply chain and logistics solutions, the main benefits for companies of using them, and some of the challenges an enterprise can face as it implements these tools.

If you’re interested in learning more about how the Internet of Things can be used in other fields, you can read one of our previously published articles about IoT apps in various industries.

IoT logistics market

IoT applications in logistics are hardly new. Two (and even more) decades ago, logistics managers were actively using location management tools and other types of software for tracking deliveries. Of course, the apps used at that time were quite different from what we see now. Nevertheless, even with a minimal set of functions, such tools helped to facilitate tasks and workflow significantly for managers and truck drivers.

Today, when IoT applications for logistics have become an integral part of business processes in many countries, the market for IoT supply-chain software continues to expand. Among the factors that are boosting this growth are the rapid expansion of e-commerce as well as the need for highly organized transportation processes.

The market size in 2019 was $34.5 billion, but it is expected that by 2030 we will see a figure of $100 billion. According to a report published in November 2021, the global Internet of Things in the logistics market is predicted to show growth with a CAGR of 24% between 2021 and 2027.

IoT systems in logistics: benefits for businesses

Today many experts in logistics can’t imagine doing their work without various software tools and applications. This isn’t just a modern trend or a pure consequence of overall digitalization. 

 IoT software lets logistics managers make more conscious and efficient decisions in terms of goods arrivals and the process of deliveries. This makes it possible to significantly reduce the risks inherent in imprecise planning. With IoT software, developing the most suitable transportation routes given current road and weather conditions, as well as other factors, is significantly easier and faster in comparison to manual methods.

All in all, we can say that IoT tools provide the following benefits for logistics and supply chain management:

  • Automation of planning
  • Real-time tracking
  • Enhanced reporting and documentation development
  • Reduction of time and costs needed for route designing and delivery organization
  • Mitigation of risks related to failed deliveries
  • Streamlining of the entire supply chain process
  • Improved inventory management
  • More transparent processes

Use cases of IoT applications in logistics

Today IoT software can be used for solving a variety of tasks. Below is a list of the most popular solutions widely applied across numerous companies all over the world.

IoT logistics

Inventory tracking systems. These solutions are aimed at streamlining procedures related to re-stocking and distributing goods. Such software is built to gather and process data received from connected sensors placed on products. As a result, managers know that goods are safely stored and where they are located at any given moment. These apps significantly improve warehouse management and asset tracking, thanks to minimizing the risk of human errors and reducing the time needed to find the location of different items.

Location management tools. In transport logistics, it is very important for managers to know the precise real-time location of each vehicle, get a full understanding of current delivery status and be able to estimate when goods can be shipped. Location management tools serve exactly these needs. 

Thanks to them, logistics companies can avoid time losses related to traffic conditions, improve the efficiency and accuracy of their fleet and goods tracking, as well as make sure that they are complying with obligations set down in their contracts with clients and delivering goods in time.

Predictive analytics systems. To this group, we can add software platforms that collect data from various devices in real-time, process the received information and prepare reports and forecasts based on the latest updates. With these solutions, specialists can make more efficient decisions on deliveries and warehouse planning. Such systems can also be enriched with features for designing routes and notifying employees of changes in delivery conditions. Using predictive analytics tools, companies can determine the most appropriate modes of operation, the average time needed to get ready for a shipment, and many other organizational aspects.

Fleet management tools. Solutions of this type are often integrated into more complex systems. As companies can operate a huge number of vehicles, it’s very important for them to accumulate a great deal of real-time information about the availability and state of each vehicle. Fleet management tools help companies better organize the entire workflow. 

Automated vehicles. It’s a bit too early to speak about mass adoption of these solutions, however it’s expected that self-driving trucks will revolutionize the logistics industry in the future. Automated vehicles will help make deliveries more predictable and manageable as well as reduce the influence of human factors.

Smart trucks will be able to predict road and weather conditions, find the most appropriate routes and provide managers with real-time data for better planning of all the related processes.

Drone-based deliveries. The use of drones for deliveries looks very promising, especially for streamlining and automating goods transportation. They also can be used for moving items within warehouses and stores, as well as for facilitating last-mile deliveries. At the moment this segment is being actively studied. The retail industry could become the first to start using such solutions as a standard delivery method. It is also forecasted that drones will make it possible to reduce operational costs and staff while increasing the quality of services and customer satisfaction. 

IoT in logistics: Implementation issues

Though IoT solutions are widely applied by numerous logistics companies all over the world, we can’t say that their implementation is absolutely pitfall-free. That’s why, if you are considering some variation of integrating such a solution within your business processes, you should bear those potential problems in mind so as to address them properly.

So, what concerns should you pay attention to?

  • Data security. Before fully relying on IoT software, you should make sure the architecture is secure. Vulnerabilities related to data storage and processing, possible leaks and hacker attacks can lead to serious financial and reputational losses. 
  • Connectivity problems. As you will understand, the proper functioning of IoT solutions and real-time data exchange fully depend on the stability of the internet connection. Given the fact that delivery routes often pass through zones with poor signal coverage, it can be a serious problem. Nevertheless, these days, internet coverage is becoming wider and it is reasonable to expect that the influence of this negative factor on software efficiency will decline. 
  • High implementation costs. Although one goal of using IoT apps is to reduce operational costs, initially, it requires serious investments that can become a challenge, especially for new firms just starting their business journey.
  • Required skills. When you launch a new software product, all your employees should learn how to use it correctly. This may require some effort and time.

Nevertheless, the benefits of using IoT systems in logistics look significantly weightier than all the related challenges. 

At Cogniteq, we have solid expertise in developing IoT solutions for companies working in various industries, logistics being one of those. Thanks to a deep understanding of all the business processes within the industry, we build solutions that bring real value to companies and their customers. If you want to know more about our experience and services, please contact us via our site, and our best experts will reach out to you as soon as possible