IoT in Supply Chain Management: A

Literature Review
Project work done as a requirement of Internal Assessment of the
course Operations Management, BMS Sem IV

Submitted by:
Shreya Goyal (Roll No. 21215)
Suvanshi Agarwal ( Roll No. 21235)
Bachelor of Management Studies (BMS)
Shaheed Sukhdev College of Business Studies
April, 2022-23
INDEX

Table of Contents
INDEX.............................................................................................................................1
ACKNOWLEDGMENT....................................................................................................2
DECLARATION ..............................................................................................................3
EXECUTIVE SUMMARY ................................................................................................4
RESEARCH METHODOLOGY .......................................................................................5
INTRODUCTION ............................................................................................................7
SUPPLY CHAIN MANAGEMENT ..................................................................................7
Importance of Supply Chain Management ............................................................................. 9
Weak links in Supply Chain Management .............................................................................. 9
Smart Supply Chain Management ........................................................................................ 10
INTERNET OF THINGS (IoT) ......................................................................................10
Advantages of Internet of Things .......................................................................................... 11
Internet of Things Architecture ............................................................................................ 11
INTERNET OF THINGS AND SUPPLY CHAIN ..........................................................12
Challenges of Supply Chains................................................................................................. 12
Integration of IoT and Supply Chain .................................................................................... 12
INTERNET OF THINGS TECHNOLOGIES .................................................................14
CONCLUSION ..............................................................................................................16
REFERENCES ..............................................................................................................17

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ACKNOWLEDGMENT

We would like to express our esteem admiration to Dr. Rishi Rajan Sahai, Professor at Shaheed
Sukhdev College of Business Studies, University of Delhi, for his precious and constructive
suggestions during the progress of this paper. This paper would not have been possible without
his exceptional support. His comprehension, proficiency, and attention to detail have been an
inspiration. His willingness to give his time so generously has been very much appreciated.

The topic “IoT in Supply Chain Management” has helped us explore various facets of the
Supply Chain Management domain in line with our subject matter, Internet of Things (IoT)
through extensive research and brainstorming sessions. The topic helped us understand the
nuances of IoT and its application in supply management along with its importance in solving
complex contemporary business problems.

We are also grateful for the insightful inputs offered by our family, friends, and peers for their
unending support and blessings that contributed to the successful completion of this paper. The
hard work and contribution of one and all have improved this study in multifarious ways and
saved us from many errors; those that inevitably remain are entirely our responsibility.

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DECLARATION

We declare that this research paper is an original report of our research, has been written by
us and has not been submitted for any previous semester or paper. The research and literature
survey is almost entirely our own work; the collaborative contributions have been indicated
clearly and acknowledged. Due references have been provided on all supporting literatures
and resources. We declare that this report was composed by us, that the work contained
herein is our own except where explicitly stated otherwise in the text, and that this work has
not been submitted for any other degree or professional qualification.

Date – April 2, 2022

Place – New Delhi

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EXECUTIVE SUMMARY

The integration of the Internet of Things (IoT) with supply chain management has the
potential to revolutionize the way businesses operate. This report analyzes the landscape of
supply chain management, providing an overview of the key challenges and trends shaping
the industry. It then explores the concept of the Internet of Things and how it can be applied
to the supply chain, providing real-world examples of how IoT devices and sensors can be
used to streamline operations and enhance efficiency.

The report highlights the benefits of integrating IoT with supply chain management, such as
improved visibility, enhanced traceability, and better decision-making. By providing real-
time data and insights into every aspect of the supply chain, IoT devices and sensors can help
businesses optimize their operations, reduce costs, and improve customer satisfaction.

However, the report also identifies several challenges that need to be addressed before
widespread adoption of IoT in the supply chain becomes a reality. These include concerns
around data security, privacy, and the need for standardized protocols and regulations.
Overall, the report concludes that the integration of IoT with supply chain management has
the potential to revolutionize the industry, and businesses that invest in this technology will
gain a significant competitive advantage in the years to come.

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RESEARCH METHODOLOGY

The present paper is based on secondary sources of data available in printed form,
electronically, or from other sources. It is the descriptive method, describing facts as it is
from the review of the available works of literature. The objective of this paper is to identify
major works on application of Internet of Things (IoT) in supply chain management, and
thereafter, to classify them to identify gaps, issues, and opportunities for further study and
research.

A literature review seems to be a valid approach, as it is a necessary step in structuring a

research field and forms an integral part of any research conducted. This helps to identify the
conceptual content of the field and guides toward theory development. Our research is driven
by theoretical pre considerations and follows a clear process, as this allows conclusions to be
drawn on the reviewed literature. It may be classified as an archival research methodology in
the framework for conducting and evaluating research.

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6
INTRODUCTION

In today’s world supply chains are operating under ever changing environment and hence are
vulnerable to a variety of risks. Several risk factors affect this ever changing environment.
Companies are challenged with finding ways to meet ever rising customer expectations at a
manageable cost. The expanse over wide geographies exposes supply chains to risks on global
scale. The global spread of supply chains, is further being challenged with significant increase
in customer awareness. Customer today not only desire timely delivery, they also demand and
are highly sensitive with respect to product quality, price and service. With involvement of
diverse and dispersed players, managing uncertainty in the supply chain process poses a big
challenge. Despite big scientific developments on several aspects of supply chains, a number
of unpredictable and difficult to control factors can affect timely fulfilment of orders. Typical
common factors causing late deliveries are traffic and shortage of stocks.

Rapid developments in technology has led to equally rapid obliviousness which has further
increased the complexity of supply chains. Hence, Supply chain management has become
essential and important aspect of many industries. To survive in such competitive and
challenging environment, companies have to build a robust but structurally flexible, risk free
and highly responsive supply chain.

A lot is being written about the Internet of Things (IoT) and how it will affect nearly every
global industry – from retail to connected vehicles. The IoT is defined as the Internet-enabled
global intelligent platform of uniquely addressable devices with sensing, networking and
actuation capabilities that facilitates things-to-human, human-to-machine, and machine-to-
machine information exchange in heterogeneous environments. Due to its increasing potency,
Industry 4.0 has envisioned the IoT as a foundation technology of cyber-physical systems.

One of the most exciting areas of impact of IoT is the global supply chain. This has been
achieved through improving communication, acquiring and transmitting data which enables
quick decision making and enhancing supply chain performance.
Implementation of IoT has significantly improved typical challenges of SCM like visibility of
the chain and at the same time has enhanced agility and adaptability of SCM.

"The influence of the Internet of Things is crazy," is how a supply chain managers have
expressed their views. This perception is consistent with the mounting scholarly literature in
the area of the Internet of Things (IoT).

This report deals with various elements of supply chain and its management. The importance
and challenges of supply chain management.

SUPPLY CHAIN MANAGEMENT

Supply chain management (SCM) refers to the coordination of activities involved in the
production and delivery of goods and services to customers. The goal of supply chain

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management is to optimize the flow of materials, information, and finances from suppliers to
manufacturers to distributors to retailers and ultimately to the end customers.

Effective supply chain management requires a holistic approach that takes into account all
aspects of the supply chain, including procurement, production, transportation, warehousing,
inventory management, and customer service. The success of a supply chain depends on the
efficient and effective management of all these components.

Procurement is the process of acquiring raw materials, components, and other inputs needed
for production. This involves identifying reliable suppliers, negotiating favourable terms and
prices, and ensuring timely delivery of goods. An effective procurement strategy can help
reduce costs, improve quality, and mitigate supply chain risks.

Production involves the transformation of raw materials into finished goods. This may involve
various processes such as assembly, manufacturing, packaging, and quality control. An
efficient production process can help minimize waste, reduce lead times, and improve product
quality.

Transportation involves the movement of goods from one location to another. This may involve
various modes of transportation such as trucks, ships, trains, and airplanes. An efficient
transportation system can help reduce transportation costs, improve delivery times, and
enhance customer satisfaction.

Warehousing involves the storage and management of goods before they are delivered to
customers. This may involve various activities such as receiving, storing, picking, packing, and
shipping. An effective warehousing strategy can help minimize inventory costs, improve order
accuracy, and ensure timely delivery of goods.

Inventory management involves the control and monitoring of inventory levels throughout the
supply chain. This includes forecasting demand, determining optimal inventory levels, and
managing inventory turnover. An effective inventory management strategy can help minimize
inventory holding costs, reduce stockouts, and improve order fulfilment rates.

Customer service involves providing timely and effective support to customers throughout the
supply chain. This includes handling customer inquiries, processing orders, and resolving
customer complaints. An effective customer service strategy can help improve customer
satisfaction, increase customer loyalty, and enhance the reputation of the company.

Thus, supply chain management is a critical function for any organization that produces and
delivers goods and services. By optimizing the flow of materials, information, and finances
throughout the supply chain, organizations can reduce costs, improve efficiency, and enhance
customer satisfaction. Effective supply chain management requires a comprehensive approach
that takes into account all aspects of the supply chain and involves collaboration and
coordination among all stakeholders.

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Importance of Supply Chain Management

Supply chain management (SCM) is crucial in today's globalized and complex business
environment.

1. Cost Efficiency: Effective SCM helps organizations to reduce costs by optimizing the
use of resources, minimizing inventory costs, and improving production efficiency. It
enables businesses to achieve economies of scale by leveraging the buying power of
their suppliers.
2. Customer Satisfaction: SCM helps organizations to meet the demands of their
customers by ensuring timely delivery of goods and services. It helps businesses to
improve customer satisfaction by ensuring that the right products are delivered at the
right time and in the right condition.
3. Risk Management: SCM helps organizations to identify and mitigate risks in their
supply chain. It helps businesses to prepare for disruptions caused by natural disasters,
economic downturns, and other unforeseen events.
4. Increased Collaboration: SCM helps organizations to establish strong relationships with
their suppliers and other stakeholders. It encourages collaboration and communication
between different departments and partners, which leads to better decision-making and
improved performance.
5. Competitive Advantage: Effective SCM can provide organizations with a competitive
advantage by enabling them to deliver products and services faster, cheaper, and more
reliably than their competitors.

Weak links in Supply Chain Management

There are several weak links that can arise in supply chain management, including:

1. Supplier Risks: Suppliers can pose a significant risk if they are unable to meet their
commitments or deliver products on time. This can lead to delays in production and
delivery, impacting the entire supply chain.
2. Transportation Risks: Shipping delays, disruptions, or cancellations can occur due to
various factors such as weather conditions, political instability, or infrastructure
problems. These issues can lead to inventory shortages, delayed delivery, and increased
costs.
3. Quality Control Risks: Product quality can be compromised during the manufacturing
or shipping process, leading to product recalls, reputational damage, and decreased
customer satisfaction.
4. Demand Forecasting Risks: Demand forecasting is crucial for determining the required
inventory levels, and an inaccurate forecast can lead to inventory shortages or
overstocking. This can increase the costs of holding inventory, impacting the overall
supply chain.

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 5. Communication Risks: Communication failures between different parties in the supply
chain can lead to misunderstandings, delays, and errors. This can result in increased
costs, missed deadlines, and customer dissatisfaction.

To mitigate these risks, it is important to have contingency plans in place, establishing strong
relationships with suppliers, maintaining open communication channels, and investing in
technology and infrastructure to increase visibility and transparency across the supply chain.

Smart Supply Chain Management

Smart supply chain management refers to the use of advanced technologies and data analytics
to improve the efficiency, visibility, and agility of supply chain operations. It involves the
integration of various technologies, such as the Internet of Things (IoT), artificial intelligence
(AI), and blockchain, to automate processes, enable real-time tracking and monitoring, and
provide data-driven insights.

With smart supply chain management, companies can optimize their operations, reduce costs,
and improve customer satisfaction by:

1. Predicting demand and optimizing inventory levels to avoid stockouts or overstocking.

2. Streamlining logistics and transportation through real-time tracking and monitoring of
shipments.
3. Improving visibility across the supply chain, enabling better collaboration and decision-
making.
4. Enhancing quality control and traceability through the use of sensors, AI, and
blockchain.
5. Increasing agility and responsiveness to market changes and disruptions through
predictive analytics and scenario planning.

Overall, smart supply chain management enables companies to transform their supply chain
operations into a strategic asset, driving growth and competitiveness in today's rapidly evolving
business environment.

INTERNET OF THINGS (IoT)

Internet of things is a network of varied physical devices which connects physical devices and
allows / facilitates exchange of data.

The Internet of Things (IoT) is hence used to describe the interconnectivity of physical objects
or devices that are embedded with sensors, software, and other technologies, allowing them to
exchange data with each other and with other devices or systems over the internet. In simpler
terms, it refers to the ability of everyday objects to communicate with each other and to collect

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and exchange data through the internet. This can include everything from smart home
appliances and wearable fitness trackers to industrial equipment and vehicles.

The potential applications of IoT are vast, and they range from improving efficiency and
productivity in various industries to enhancing the quality of life for individuals. Some
examples of how IoT is being used today include smart homes, smart cities, precision
agriculture, healthcare monitoring and supply chain management in varied industries.

Advantages of Internet of Things

The advantages of IoT are numerous and diverse, and they vary depending on the specific use
case and industry. Here are some of the key benefits of IoT:

1. Improved efficiency and productivity: IoT can automate various processes, reduce
manual labour, and improve overall operational efficiency, resulting in cost savings and
increased productivity.
2. Better decision-making: IoT devices can collect and analyse vast amounts of data,
providing real-time insights that can help organizations make better decisions.
3. Enhanced customer experiences: IoT can enable organizations to create more
personalized, intuitive, and responsive products and services that meet the evolving
needs of customers.
4. Increased safety and security: IoT devices can be used to monitor and control various
environments, reducing the risk of accidents, improving safety, and enhancing security.
5. Environmental sustainability: IoT can help organizations reduce their environmental
impact by optimizing resource usage, reducing waste, and improving energy efficiency.
6. New business models: IoT can enable organizations to create new revenue streams,
business models, and partnerships by leveraging data and insights generated by IoT
devices.

Overall, IoT has the potential to transform various industries and sectors, improving efficiency,
productivity, safety, and sustainability, while also creating new opportunities for growth and
innovation.

Internet of Things Architecture

The IoT architecture is the structure or framework that defines how different components of an
IoT system interact with each other to provide the desired functionality. The architecture
typically includes four layers:

1. The device layer: This is the physical layer where the sensors, actuators, and other
devices are located. These devices collect data and transmit it to the next layer.

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 2. The connectivity layer: This layer is responsible for connecting the devices to the
network and managing the communication between the devices and the cloud. It
includes technologies such as Wi-Fi, Bluetooth, ZigBee, and cellular networks.
3. The data processing layer: This layer receives the data collected by the devices and
processes it to extract meaningful insights. It includes various components such as edge
devices, gateways, and cloud computing platforms.
4. The application layer: This layer provides the end-user applications that consume the
data generated by the IoT system. It includes various applications such as dashboards,
analytics tools, and other software applications that enable users to interact with the
system.

INTERNET OF THINGS AND SUPPLY CHAIN

Challenges of Supply Chains

1. Globalization Challenge: Having suppliers in different geographic locations

complicates the supply chain.
2. Fast changing markets: Constant fast-changing markets means enterprises constantly
have to anticipate demand for new products.
3. Quality and compliance: Pressure to create high quality products. Enterprises need to
abide by the compliance or the rules of the regulatory standards manufacturing,
packaging, handling, and shipping of their products.
4. Managing Inventory: Keeping enough hand so that all customer and client expectations
are met.
5. Managing Suppliers: Finding suppliers with consistent and reliable service at a price
that doesn’t hurt your bottom line.
6. Managing safety and quality: The globalization of supply chain brings concerns about
the quality of products that are made in other countries.
7. Risk Mitigation: Companies that rely on one or less numbers of suppliers are vulnerable
if that supplier doesn’t meet demands.

Integration of IoT and Supply Chain

Integration: A traditional SCM will have supply chain managed by business process using
planning the shipment or transport of the goods from manufacturing to the end user. But when
IoT is used the system architecture changes, the new architecture is-

The supply chain:

1. Manufacturing: Manufacturing companies can support other manufacturers,

distributors or consumers with fabricated or assembled products. Manufacturers can

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 have extensive supply chain issues within their own facilities, depending on the number
of products produced and the manufacturing processes they are engaged in.
2. Loading: While loading the goods from the manufacturer’s premises or warehouse it
has to be confirmed that all goods meet all requirements. Protection measures for goods
have to be taken in consideration.
3. Shipment: Transportation modes include trucking, rail and air. These modes are the link
between manufacturers, suppliers, retail stores and consumers.
4. Supplier: Suppliers come in many forms and are a crucial link from manufacturers to
other business and consumers. Suppliers may also perform assembly operations, carry
inventory or operate the transaction as coordinators between Suppliers and other
businesses or consumers.
5. Consumer:They buy and use the product, give feedback for the products and their
demand changes the market demand.

Business process:

1. Shipment Planning: Shipment planning includes the strategic planning of supply,

manufacturing, distribution, production scheduling, demand forecasting, and supply
chain network design.
2. Transport Planning: It deals with the flow of goods while they are taken from one SCM
component to other. It plans the route that will be taken, which mode of transportation
depending on the demand.
3. Shipment Tracking: Shipments are tracked by the use of IoT where the products,
vehicles transporting the products are considered and their locations are tracked.
Shipments can be tracked to know the location, route taken for transportation
4. Product Tracking: Product tracking is important so to avoid frauds and losses, know
their exact location whether they are in transport vehicle, in warehouse or with
suppliers.

IoT service:

1. Tracking: The tracking process involves various IoT devices. They sense conditions,
calculate distance or give the location of the products or vehicles in SCM.
2. Server: Servers are used for communication between cloud controllers and the tracking
devices as well as end users. Servers take action predefined by the business process if
need arises for instance if a container having perishable raw material being kept below
a certain temperature if the temperature rises beyond the threshold data is sent to server
which updates on cloud and sends alert of the same to the person in charge.
3. Cloud: Cloud is where everything is present like product information, customer
information, routes to be taken, algorithms for alert situations, vehicle information, real
time data etc.

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INTERNET OF THINGS TECHNOLOGIES

Technologies used for smart supply chain are divided into 2 layers:

A. Infrastructure layer: It consists of all the physical entities of the management system.

1. Sensors: Sensor is a device which serves the purpose of detecting events or changes in
its surrounding environment and send the information to other electronics, frequently a
computer processor. A sensor is always used with other electronic devices. In simpler
words, sensors are the eyes and ears of the system as they detect occurrence of events,
surrounding conditions and transmit the collected information. Different types of
sensors used in proposed system are:

• Temperature Sensor
• Humidity Sensor
• PH Sensor
• Chemical Sensor
• Tilt Sensor
• Location Sensor
• RFID Tag
• Vehicle Speed Sensor (VSS)
• Pressure Sensor
• Real Time Clock (RTC)
• Moisture Sensor

2. Sensor Nodes (SN): It is the transportation vehicle that carries various kinds of goods.
Each sensor node is provided an IP address which helps in its unique identification.
Every sensor node communicates all of its sensor data to its subsequent gateway. A
sensor node is composed of:

• Controller: The controller performs the tasks of processing the data and controlling
the functioning other components in the sensor node.
• Transceiver: The functionality of both transmitter and receiver are combined into a
single device known as a transceiver. Transceivers often lack unique identifiers.
The operational states are transmit, receive, idle, and sleep.
• External memory: Memory requirements are very much application dependent.
Program memory also contains identification data of the device if present.
• Power source: The sensor node consumes power for sensing, communicating and
data processing. Power is stored either in batteries or capacitors.

3. Gateways: All the information that has been sensed and collected by the sensors is
transmitted to the gateways. Gateways act as a common point of contact wherein
diverse kinds of information coming from heterogeneous types of sensors gets

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 collected. It is the gateway which is responsible for the global addressing of Sensor
Nodes (SN) by making use of IPv4 addresses. Every gateway is allocated more than
one area so as to enhance the granularity of SN identification. Gateway transmits all
forms of unstructured information to its subsequent proxy servers.

4. Mobile Device: It acts as a representative for a supplier or a customer. It is the mobile

device which allows the end user to monitor, track and manage the entire supply chain
on a real time basis. Any alert that is triggered from a sensor node is directly
communicated to the mobile device in wait of an appropriate response.

5. Proxy Server: It acts as an intermediary node for requests coming from a supplier or a
customer. Proxy server provides a communication link between Cloud and the rest of
the system and also offers local processing and storage capabilities in or in order to
boost the efficiency of the system.

6. Cloud: Cloud controls the entire system. It is used for storage of real time data,
algorithms, customer information, and product information.

B. Application layer: This layer consists the working and the information flow of the entire
system.

1. Mobile Application: It resides on the mobile device of a supplier or a customer and

allows them to interact, monitor and manage the rest of the entities of the system. The
mobile application receives alert notifications from the middleware and responds to
them in form of suitable actions which are then conveyed to the pilot through the user
interface.

2. User Interface: It resides on the vehicle that is responsible for the transportation of
goods. It informs the pilot of the vehicle about the route to be taken, sensor node status,
supplier information, sensor alert notifications and end user requests.

3. Middleware: The purpose of the middleware is to receive orders from the controller and
communicate them to the respective entities involved in the system. The middleware
resides at the proxy server and regularly updates the controller regarding the status and
working of all other entities. It communicates this information to the controller in
response of a suitable order.

4. Controller: Controller orchestrates the functionalities of other application modules and

entities within the system. The controller resides at the Cloud end and has detailed
information regarding every product, customer, supplier, source, destination, sensor
node, actuator, and gateway and proxy server. It is the controller which generates
detailed product supply chain reports on the basis of supply chain performance, quality
control and alters triggered by the sensors.

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CONCLUSION

In conclusion, the integration of IoT with supply chain management has the potential to
revolutionize the way businesses and service providers operate. This report has analyzed the
current weaknesses in supply chain management and identified how IoT can fill these pain
points with various use cases. The process of integrating IoT into the supply chain involves
multiple steps, including identifying the right technology, developing a comprehensive
implementation plan, and monitoring the system's performance.

IoT has the potential to address the pain points in supply chain management such as lack of
real-time visibility, inefficient inventory management, and lack of transparency in the supply
chain. IoT-enabled sensors and devices can provide real-time data on the location, condition,
and status of products, enabling businesses to optimize their supply chain operations.
Furthermore, IoT can enable businesses to track their inventory levels in real-time and
prevent stock-outs, reducing the overall cost of operations.

The integration process requires careful consideration and planning. It is important to identify
the right technology that aligns with the organization's business goals and processes. Once
the technology is selected, a comprehensive implementation plan must be developed,
including the identification of key stakeholders, training programs, and change management
processes. The implementation plan must also include a mechanism for monitoring and
measuring the system's performance to ensure that it is delivering the desired outcomes.
It is important to note that the integration of IoT with supply chain management is not a one-
size-fits-all solution. Different businesses and service providers have unique supply chain
needs, and the integration process must be tailored accordingly. Additionally, the
implementation of IoT requires significant investment in terms of time, resources, and
financial capital. Organizations must be prepared to make these investments to achieve the
desired outcomes.

Overall, the integration of IoT with supply chain management has the potential to transform
the way businesses and service providers operate. By addressing the pain points in supply
chain management, IoT can enable organizations to optimize their operations, reduce costs,
and improve customer satisfaction. However, it is crucial to undertake a comprehensive
analysis of the organization's needs and develop a tailored implementation plan to ensure that
the integration process is successful.

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