IoT in Logistics: Transforming the Industry

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 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 2022 was $39.6 billion, but it is expected that by 2032 we will see a figure of $114.7 billion.

According to the data revealed by experts, the global Internet of Things in the logistics market is predicted to show growth with a CAGR of around 11% between 2022 and 2032.

For many years, the logistics industry remains to be one of the most actively growing industries. However, there are some barriers that prevent many logistics companies from their expansion and growth. These barriers are mainly related to the lack of software tools that could automate numerous time-consuming processes that currently have to be performed manually. As a result, logistics specialists lose a lot of time fulfilling monotonous repetitive paperwork tasks instead of devoting time to more creative and intellectual activities.

Nowadays, among the factors that prevent the industry from further development, we can name the lack of access to real-time data that can demonstrate the most relevant road conditions, low control over delivery processes, low transparency of supply chain stages, and inaccurate route planning.

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

When it comes to IoT in logistics, it is important to understand that such solutions allow us to unite into one system a wide row of objects and devices that traditionally have never been connected before. But together they offer us completely new opportunities related to their use. As a result, we can enjoy dozens of new benefits that can bring their fruits to all supply chain participants. Below you can find a list of components of this ecosystem and see how different aspects often the transportation industry are changed and enhanced thanks to the application of modern solutions.

• Communication. In the logistics industry, a communication system is typically aimed at ensuring a safe and reliable channel for establishing interaction between truck drivers and their managers. As a rule, such well-known devices as mobile phones and tablets are used for instant data exchange between drivers and those employees who usually work in offices.
• Geolocation monitoring. GPS is one of the most well-known technologies for tracking location in real-time and today devices with special GPS modules are used to detect the location of trucks at any moment when this information is required. Thanks to having the most relevant data, managers have a more precise understanding of where the cargo is and when it can be delivered to the desired destination even when it is necessary to transport goods to remote locations.
• Cybersecurity. Protecting sensitive data is one of the most important issues that companies working in various industries have to consider. And the logistics industry is not an exception. To avoid serious financial losses and reputational damages, companies need to invest in tools and technologies that will enhance the security of their IoT systems.
• Supply chain tracking. Solutions enriched by IoT in logistics also include tools for tracking supply-chain processes and transportation stages in real-time. They help to facilitate all delivery processes and all other steps related to product manufacturing starting from raw material purchasing.

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

• Inventory tracking systems

These solutions created for the logistics industry are aimed at streamlining procedures related to re-stocking and distributing goods. Such software powered by the Internet of Things 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.

With the help of solutions powered by IoT in logistics, managers have the possibility to faster and more easily track the levels of stocks. With the sensors and various smart devices that are intended for being placed on shelves, warehousing equipment, and vehicles, specialists who deal with different tasks related to supply chain stages, including sales, orders, and deliveries, can have the freshest data about the quantity or volumes of the chosen position. When a critical stock level is detected, IoT devices notify managers in real time so that they can react to this information in time and avoid situations that can lead to serious deterioration of the shopping experience for clients.

Moreover, IoT 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 the current delivery status and be able to estimate when goods can be shipped. Location management tools serve exactly these needs. Such Internet of Things tools can be enriched with modern GPS modules intended for monitoring the location of a vehicle as well as detecting the speed at which drivers cover some particular distances. First of all, this parameter helps to evaluate the real situation on the road which is important for route management and better planning of all supply chain processes. Secondly, it shows whether drivers do not ignore the traffic rules and whether they can ensure the safe delivery of products.

Thanks to them, logistics companies can avoid time losses in the delivery process 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 shipping goods on time. If due to unpredicted factors transportation of goods is delayed and a driver doesn’t have the possibility to reach the destination at the agreed time, logistics managers will be timely informed about that (or they will be able to see it on their own in their apps) and they will have the possibility to warn a client or to elaborate a new solution.

• 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 powered by IoT in logistics, companies can determine the most appropriate modes of operation, the average time needed to get ready for a shipment, and many other organizational aspects.

Advanced analytics systems that can be built today allow managers to find any deviating trends and to have enough time to adequately react to them without serious losses for their companies and their clients. With such tools, logistics specialists can start working on developing new approaches or finding new solutions that will help to return to normalcy

Thanks to these possibilities, the quality of logistics processes and services can be greatly increased, as well as client loyalty and satisfaction. Together, all these outcomes result in growing profits for the logistics firms. Very often, such tools enriched with IoT in logistics and transportation are integrated with other business apps.

• 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. 

Fleet management solutions have a lot in common with software products that are built for location tracking. However, they can be used not only for monitoring the exact real-time location of trucks but also for tracking their technical state. Special sensors and devices can be installed on trucks and can continuously estimate the chosen parameters. Based on these parameters, logistics specialists can receive regular reports on the state of vehicles and on recommended timeframes for tech maintenance services. The data from smart devices is sent to the defined servers where the company’s employees can get access to them.

• Automated vehicles

It’s a bit too early to speak about the mass adoption of self-driving vehicles, 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.

Nevertheless, today, it is still too early to say that quite soon driverless cars will fully replace traditional cars due to a row of serious disadvantages that we can detect together with multiple benefits. The first disadvantage that companies can face is a very high purchase price of self-driving vehicles. The second one is related to the costs of maintenance services. Even the less significant mechanical issues can lead to very serious amounts that will have to be paid. Moreover, there can be some unpredictable road conditions and an automated vehicle won’t be able to react to them in a proper way due to the lack of the corresponding algorithm

• Drone-based deliveries

The use of drones for deliveries looks very promising, especially for streamlining and automating goods transportation. At the moment the drone based delivery segment is being actively studied. Nevertheless, today is definitely not the best time to speak about the full-scale adoption or mass use of drones in the logistics and transportation industry when it comes to long distances and remote locations. Drones are good for in-house deliveries but with the growth of distances, it is not always reasonable and feasible to use drones. Moreover, many drones are simply not able to carry very heavy boxes and packages which also limits their use to some specific cases only.

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. But with the growing interest in the application of drones from the side of companies working in many industries, including logistics, we can make an assumption that in the future, the situation will change.

Speaking about various IoT solutions built for the logistics sector, it will be interesting to have a look at some examples of such systems that are already being used by companies today.

DHL is a well-known logistics company that has become one of the pioneers in embracing the capabilities of IoT sensors and devices for the optimization of their operations. IoT devices are applied by the company to track the real-time location of its deliveries to enhance routes and reduce fuel consumption by analyzing weather conditions, traffic situations, and other factors. It helps to decrease operating costs and to achieve higher customer satisfaction. Another thing to mention is that IoT sensors used by DHL can also monitor the temperature and humidity of the environment where freight is kept which is also important for providing high-quality transportation and logistics services.

Another logistics company to mention in this context is Maersk. It is open to innovations and is continuously looking for ways to modernize its services and approaches to deliveries. It relies on data gathered by IoT devices for enhancing vessel operations and ensuring cargo visibility. Among other applications of IoT by Maersk, it’s worth mentioning quality assurance and predictive maintenance across the entire supply chain.

Though already today we can see real-life applications of IoT 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 in logistics, 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 the efficiency of IoT devices and software 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 enriched by IoT in logistics, 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

The tech progress allows developers to deliver more and more advanced solutions. Given the achievements in the tech industry, it will be sensible to presuppose that IoT systems in transportation and logistics will be further modernized and enriched with new features.  

• Integration of AI tools. AI and IoT can greatly support the capabilities of each other. While IoT sensors can gather a lot of valuable data, AI can be used for its deep analysis, pattern detection, and accurate predictions. It is expected that artificial intelligence tools will be widely used to make IoT systems for the logistics sector much more powerful.
• Blockchain implementation. One of the greatest concerns related to the applications of IoT in logistics is the security of the gathered data. And this concern can be addressed by sending this data to an immutable blockchain ledger where each transaction will be recorded and verified.
• Focus on sustainability. The transportation and logistics industry is often blamed for its huge impact on the environment and is said to be responsible for around 11% of global CO2 emissions. Smart devices enriched with IoT sensors are able to help companies to track their emissions from each vehicle and facility. Based on this data, it will be possible to develop an efficient strategy for emission reduction.

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