The internet of things (IoT) is no longer a term that only tech-minded experts know. Worldwide spending on IoT is constantly growing, and is forecast to reach $745bn this year, an annual increase of almost $100bn.

The vast majority of that spend is by businesses looking to improve operational efficiency and find new revenue opportunities. Rising demand is also supporting a growing ecosystem of more than 4,500 IoT technology developers globally. 

One of the biggest opportunities for companies is in the IoT-enhanced supply chain. By connecting goods, assets and people, it’s possible for companies both to improve supply-chain efficiency and unlock new revenue opportunities.

IoT-enhanced supply chains are driven by three improved capabilities that come from integrating objects and devices into a multi-connected network:

Improved asset-condition monitoring. With smart sensors having the power to monitor any object, IoT solutions can bring detailed insights into the precise condition of inventory. By reporting both on physical aspects, such as spoilage or damaged packaging, and environmental conditions, including humidity, temperature, and acidity, companies can gain an overview of the state of cargo in the warehouse and after deployment. Additional problems can be detected in transit, such as spills, unusual motions, and even the state of the transport medium. This level of visibility directly addresses one of the biggest challenges of the supply chain: ensuring that goods arrive intact and usable.

Improved asset-location tracking. In addition to monitoring the condition of items, IoT systems can track their location at all times. Pervading every step of the logistics journey, this capability ensures that misplaced inventory and lost shipments become a thing of the past. The impact becomes even more significant as the supply chain continues to grow, connecting all carriers’ vehicles and equipment.

Beyond monitoring individual items, IoT can provide an overview of the fleet, enabling tighter control over product movement. As a result, companies can avert external complications such as traffic jams and bad weather, improve the planning of routes and transit modes, allow for the arrangement of multi-leg shipments, and guarantee product availability with minimal lead time.

Advanced analytics. The unprecedented volume of data that IoT systems generate provides companies with the opportunity to gain specific insights into operations using advanced analytics. Real-time performance monitoring is accompanied by opportunities for predictive analytics. Not only does it empower companies to make more informed decisions than with manual methods, but information can be accessed more rapidly, significantly cutting down supply-chain cycles.

One of the main benefits of IoT-enabled capabilities is enhanced quality control. Spoilage and fraud are on the mind of every supply-chain manager — especially given the need for storing perishable goods under strict conditions. Nearly 30 percent of perishable cargo gets destroyed during transit around the globe, mainly due to unregulated temperatures and poor storage conditions. That’s exactly where IoT-powered condition monitoring can help, by constantly monitoring storage conditions and sending alerts whenever they aren’t met. 

IoT makes it easier to keep an accurate inventory. Big warehouses in particular have long struggled with visibility. When goods are moved in and out, they can be easily forgotten, left in the loading dock, or even stolen.

Beyond eradicating this critical problem, IoT presents an opportunity to optimize production schedules. With clear numbers, companies know the state of their inventory and can confidently carry out orders. They can constantly monitor conditions during shipping in order to predict and prevent problems that are traditionally associated with the logistics process. And they can share information with customers, bringing greater transparency to the supply chain.

IoT can also revolutionize the way that contracts are sealed. It allows shippers to specify requirements for product storage, establish clear procedures in case of a breach, and issue a warranty claim when storage conditions exceed tolerances. The additional layer of transparency brings greater value, ensuring that claims are based on data rather than speculations.

All this is part of the wider benefit of better understanding vendor relations and identifying those that are unprofitable. Up to 65 percent of the value of a company’s products or services is derived from suppliers, creating the incentive for companies to pay closer attention to how vendors are handling supplies they are sending to the customer.

The benefits don’t stop at improving the efficiency of current operations. There are also new revenue opportunities enabled by the IoT-connected supply chain. For example, if a company collects real-time data from its delivery fleet, it can help to monetize the return journey for some delivery vehicles by allowing them to fill their capacity from nearby locations.

Opportunities to build a closer relationship with the end consumer are also enabled. Companies can build a reputation for social responsibility, provide better guarantees, and even bring a spark of storytelling, showing that each product has a specific journey. Provenance, provider of a digital platform utilizing blockchain technology, allows brands to create a story about their products and supply-chain journey. The company's vision is that one day all products, whether a bottle of wine or a pair of jeans, will come with accessible and trustworthy information about the origin, journey and impact.

Likewise, IoT can enable important feedback from retail, such as visibility into customers’ habits. Retailers can provide real-time information into what’s sold out, what’s selling faster and what’s still available, without the need to restock. By allowing the adoption of knowledge-as-a-service models, the IoT is creating new value in supply chains.

The internet of things makes the invisible visible, transforming supply chains to be more efficient, shorter, and increasingly transparent. Apart from improvements to the status quo, the technology serves as a springboard for future development and innovations such as automation — all while offering opportunities for novel, creative approaches and closer connections to the customer.

Andrew Thomson is the founder of VentureRadar.