Not only will IoT technology allow for better visibility, such as identifying within a 10-minute timeframe when goods will be delivered, it can also aid in loss prevention and be used to measure the impact of environmental factors, such as heat, on goods moving through the supply chain, he explains. Damages to goods can be recorded with the exact time and location of the damage, providing an audit trail to identify the responsible party, he says.
Automating and optimizing the supply chain is one of the key uses of IoT among retailers, adds Nayyar. “Everyone knows in advance not to run out of chocolate before Valentine’s Day or beer around the Super Bowl, but the real question is how to handle an unexpected surge in demand due to an unscheduled event,” she says. Getting this on-shelf availability right is possible with a highly responsive IoT-enabled supply chain system, shelf sensors in the stores and warehouse systems that automatically re-order products when inventories reach certain levels.
For tracking products, RFID tags and sensors are one of the most important IoT technologies to watch, according to Mitchell. “By using RFID, retailers can increase inventory accounting accuracy, dramatically reduce out-of-stocks and reduce product loss, all of which can result in margin growth,” he says. “And with an accurate real-time understanding of where inventory is located, retailers can make cost-based decisions on the fly to best fulfill customer needs across channels.”
IoT challenges for retailers — and the future journey
In business overall, the biggest challenge with the Internet of Things is the rapid evolution of the scope and variety of the technologies that can be used in connected ecosystems, says Mitchell, noting that it can be hard to “future-proof” investments when change is ongoing.
In retail specifically, the biggest immediate hurdle for companies to overcome is how to manage, analyze and act on the reams of data pouring in from all of the connected devices. “Simply capturing the data is a challenge all by itself,” he says. “But the retailer then has to distill and transform the data into usable information.”
To quickly and accurately understand shopper behaviors, for example, high-performance analytics must be applied to the data to separate noise from meaningful signals. “Those insights need to then be connected to a decision management engine to orchestrate action – whether that means personalizing an in-store display or repositioning inventory in a warehouse,” Mitchell says.
The retail industry is at the beginning of the IoT journey, says Nayyar. And the important thing for merchants to recognize at this point is that the IoT isn’t just about sensors and connectivity — it’s really about business outcomes, such as creating new customer experiences, revenue streams and business models.
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