Impact of IoT on Supply Chain Performance

Abstract

Purpose: To increase the understanding of the IoT by demonstrating its impacts and benefits on supply chain performance.

Design/methodology/approach: System dynamic simulation modeling to estimate IoT impacts on supply chain performance, based on a previously proposed framework and its propositions.

Findings: In general, simulation results show a positive impact on the supply chain activities where the propositions targeted. Specifically:

P2: better decision-making. – The study case shows better asset utilization, and reduced shipping time. However, transportation costs increase because of the lack of a decision-making system.

P3: enhanced supply chain connectivity/collaboration/integration. – The study case shows that benefits of supply chain integration through demand planning can be obtained.

P5: reduced lead-time. – The study Case shows a reduced shipping time when location technology and when all technologies are combined.

P6: better asset utilization. – The study Case shows a higher utilization factor, hinting a better asset utilization even without a decision-making system.

Research limitations/implications: The models here presented are based on merged data from different sources: Primary and secondary sources, and estimates based on assumptions. The mere nature of the base-data limits the precision of results.

Practical implications: The implementation of data collection or data transmission technologies alone is not sufficient to obtain full benefits. A decision-making processing system, that integrates the complete array of appropriated technologies, should also be implemented. This the underlying concept and the contribution of the IoT.