---
title: How the Internet of Things (IoT) is Revolutionizing Inventory Management
description: The greater the speed, scale and accuracy of data collaboratively shared across supply chains, the stronger supplier networks become. The world’s best-performing supply chains, as defined by Gartner earlier this year in their annual Supply Chain 25 List, are all using digital transformation technologies including the Internet of Things (IoT) and predictive analytics in full
---

#  How the Internet of Things (IoT) is Revolutionizing Inventory Management 

 Last Reviewed: April 4, 2025  11 min read [1 comment](https://www.selecthub.com/inventory-management/internet-of-things-iot-revolutionizing-inventory-management/?noamp=mobile#comments) 

[ ![Louis Columbus](https://secure.gravatar.com/avatar/3d07956a519d5c4d98b3a22d5efa5a6f76a14015afbce4388179a36c8eab3914?s=96&d=mm&r=g) ](https://www.selecthub.com/author/louis-columbus/) [Written by Louis Columbus](https://www.selecthub.com/author/louis-columbus/) 

Technical Content Writer 

Table of Contents

* [IoT Quick Facts](#IoT%5FQuick%5FFacts "IoT Quick Facts")
* [What is the Internet of Things?](#What%5Fis%5Fthe%5FInternet%5Fof%5FThings "What is the Internet of Things?")
* [How Can IoT Impact Businesses?](#How%5FCan%5FIoT%5FImpact%5FBusinesses "How Can IoT Impact Businesses?")
* [How IoT Enables Global Supply Chains To Excel at Inventory Management](#How%5FIoT%5FEnables%5FGlobal%5FSupply%5FChains%5FTo%5FExcel%5Fat%5FInventory%5FManagement "How IoT Enables Global Supply Chains To Excel at Inventory Management")

  
<?xml encoding="utf-8" ?>

The greater the speed, scale and accuracy of data collaboratively shared across supply chains, the stronger supplier networks become. The world’s best-performing supply chains, as defined by [Gartner earlier this year in their annual Supply Chain 25 List](https://www.gartner.com/newsroom/id/3728919), are all using digital transformation technologies including the Internet of Things (IoT) and predictive analytics in full production environments. IoT is revolutionizing every aspect of these world-class supply chains.

## IoT Quick Facts

* Business-to-business (B2B) applications of the Internet of Things will generate $300B in revenues by 2020, according to a recent [Bain Insights Brief](https://www.bain.com/publications/articles/choosing-the-right-platform-for-the-industrial-iot.aspx).
* Manufacturing, Consulting, Business Services and Distribution & Logistics are the top four industries leading IoT adoption today, and will accelerate through 2020, according to [a recent study by Dresner Advisory Services](https://www.forbes.com/sites/louiscolumbus/2017/11/12/2017-internet-of-things-iot-intelligence-update/#2dec6e287f31).
* IoT is generating four forms of financial value in manufacturing today, with inventory management & optimization emerging as a leading profit contributor, according to [a recent survey of enterprises by Gartner.](https://www.gartner.com/document/3825464)

## What is the Internet of Things?

The Internet of Things refers to the interconnectivity of all types of devices around the world as well as to the people that use them. [Jacob Morgan](https://www.forbes.com/sites/jacobmorgan/2014/05/13/simple-explanation-internet-things-that-anyone-can-understand/#474ff5651d09) at Forbes describes it as “The concept of basically connecting any device with an on and off switch to the internet (and/or to each other),” and involves every device you can think of, including consumer electronics such as cellphones, coffee makers, washing machines, headphones and wearable devices, as well as bigger machines such as manufacturing equipment. In the very near future, almost all (if not all) devices on the technology market will be equipped with internet connectivity, contributing to the growing IoT. A [Gartner study](https://www.gartner.com/newsroom/id/2636073) predicted that by 2020 there will be 26 billion connected devices worldwide, allowing those devices and the people using them to connect more than we ever thought possible.

Now you may be wondering what the big deal is about a bunch of interconnected consumer electronics and manufacturing machines. It just means that more people in more places will be able to share and watch cat videos, right? Although that’s probably true, the full potential of IoT technology lies in the automation and increased efficiency of our daily lives and, indeed, of our businesses. Morgan provides two enticing examples of the possibilities of IoT technology: “What if your alarm clock wakes you up at 6 a.m. and then notifies your coffee maker to start brewing coffee for you? What if your office equipment knew when it was running low on supplies and automatically re-ordered more?” IoT technology is data-driven, using the internet connectivity of potentially thousands or millions of devices to share information that simplifies and improves all kinds of tasks.

## How Can IoT Impact Businesses?

At this point, we hope that the possibilities of the Internet of Things excites you, if only because of coffee that can make itself. As a company involved in the business software landscape, we’re particularly excited about what IoT can do outside of the consumer technology market. Specifically, we’re excited about what it can do for maintenance management software. One of the most innovative categories of business software is [Enterprise Asset Management software](https://www.selecthub.com/eam-software/) (EAM), a type of [computerized maintenance management system](https://www.selecthub.com/cmms-software/) (CMMS). [Techopedia](https://www.techopedia.com/definition/13883/enterprise-asset-management-eam) notes that EAM software solutions help businesses with “The management of the assets of an enterprise across departments, facilities, business units and geographical locations, \[integrating\] techniques for holistic control and optimization.”

Generally used by large corporations, an EAM software solution collects data from various internet-enabled machines and devices used by a company in order to help improve efficiency. EAM software can be used to improve the supply chain or to test how well certain parts are working. The latter helps engineers realize when a part needs maintenance or simply needs to be replaced. Regular maintenance is a must for large equipment and heavy machinery, but it’s made easier when there’s [software that can monitor](https://www.selecthub.com/cmms/preventative-maintenance-software-benefits/) each piece of equipment and detect problems when they happen, rather than finding said problem after the fact.

Additionally, widely-scaled EAM solutions can compare data from different facilities. No longer is it a guessing game as to which facility runs the best and why. The data collected from every device in every facility can be compared to find which processes a particular facility may be better at than another and why that’s the case. Despite this, the most exciting aspect of EAM is not only the ability to improve maintenance and the supply chain, but the ability to reduce environmental impact. By constantly monitoring the machines and devices involved in industries such as manufacturing, these corporations can increase their focus on improving sustainability on a large scale, hopefully leading to much greener processes in the near future.

The Internet of Things is already a large part of our daily lives (whether or not we realize it yet), and will only become larger as the number of connected devices. We’re excited to see the improvements and innovations that are on the horizon, from automated coffee to greener manufacturing facilities. The only limit lies in our ability to find new uses for IoT technology.

## How IoT Enables Global Supply Chains To Excel at Inventory Management 

What are the lessons learned from these world-class supply chains when it comes to inventory management? First, these high-performance supply chains have a culture that’s rich in analytics, insight, contextual intelligence and accountability for results. They each have built a culture that’s strengthened daily with customer insights gained from IoT data that comes from their distribution networks.

Second, each of these supply chains can quickly aggregate massive amounts of data, finding new insights to grow profitable new businesses and optimize existing supply chains. Third, the level of collaboration these firms attain across their supplier and customer networks is turning data itself into a currency, complete with a monetary value, all based on IoT-based data.

Fourth, IoT data is the foundation for improving track-and-traceability performance and product quality. IoT systems and supporting analytics are the foundations of the supply chain, inventory management, supplier collaboration and supplier quality management and compliance improvements that propel the world-class supply chains in [Gartner’s Supply Chain 25 List](https://www.gartner.com/newsroom/id/3728919) to global leadership and prominence. The following are examples and leading indicators of how the Internet of Things is revolutionizing Inventory Management:

**Business-to-business (B2B) applications of IoT will generate $300B in revenues by 2020, according to a recent** [**Bain Insights Brief**](https://www.bain.com/Images/BAIN%5FBRIEF%5FChoosing%5Fthe%5FRight%5FPlatform%5Ffor%5Fthe%5FIndustrial%5FIoT.pdf)**.** Industrial applications of IoT will be a major catalyst for overall market growth in B2B through 2020\. [Supply Chain Management](https://www.selecthub.com/category/supply-chain-management/) (SCM), Inventory Management and Logistics are core areas of Industrial Internet of Things (IIoT) growth. The following graphic compares IoT and analytics revenue growth from 2015 to 2020:

* **![Bain IoT Forecast]()IoT’s potential contributions to Inventory Management, Supply Chain Management and Logistics could reach between $560B to $850B per year by 2025.** The McKinsey Global Institute’s study, [_The Internet of Things: Mapping The Value Beyond the Hype_](https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/McKinsey%20Digital/Our%20Insights/The%20Internet%20of%20Things%20The%20value%20of%20digitizing%20the%20physical%20world/The-Internet-of-things-Mapping-the-value-beyond-the-hype.ashx), provides insights into how IoT technologies and systems will enable greater revenue growth across core enterprise processes and strategy areas by 2020\. Automating logistics routing with IoT technologies has the potential to deliver between $253B and $460B alone. The following graphic from The McKinsey Global Institute study provides a detailed breakdown of supply chain, logistics and inventory management-related economic impacts:
* **![McKinsey Global Impact SCM Inventory Management]()Manufacturing, Consulting, Business Services and Distribution & Logistics are the top four industries leading IoT adoption today, and will accelerate in future.** A recent study by[ Dresner Advisory Services](https://dresneradvisory.com/) found that IoT’s greatest potential value is in simplifying the most complex manufacturing processes, including distribution, logistics and warehouse management. IoT early adopters are most often defining goals with clear revenue and competitive advantages to drive initiatives. Manufacturing, Consulting, Business Services and Distribution/Logistics represent challenging, competitive industries where revenue growth is often tough to achieve. IoT initiatives that deliver revenue and competitive strength are the quickest and most likely to get funding and support. The following graphic from [Dresner Advisory Services](https://dresneradvisory.com/) provides insights into IoT Importance by Industry from their study, _Internet of Things (IoT) Intelligence Market Study_, [summarized here on Forbes](https://www.forbes.com/sites/louiscolumbus/2017/11/12/2017-internet-of-things-iot-intelligence-update/#2dec6e287f31):
* **![IoT Importance By Function]()Integrating IoT platforms with location intelligence, streaming data analysis and cognitive BI deliver the greatest business benefits in a variety of functions, including supply chain and warehouse management, according to a recent** [**Dresner Advisory Services**](https://dresneradvisory.com/) **study.** Consistent with previous studies, both the broader respondent base and IoT early adopters place a high priority on reporting and dashboards that provide greater supply chain visibility and control. The Dresner study also found that IoT early adopters also see the greater importance of visualization and end-user self-service, especially in supply chain and warehouse management. IoT is revolutionizing this aspect of warehouse management by improving the quality of data-driven decision making. The following graphic provides an overview of IoT early adopters’ preference for IoT and its related technologies:

[ Get our Inventory Management Systems Comparison Matrix. **74% of IoT early adopters say location intelligence is critical or very important.** Conversely, only 26% of the overall sample from the Dresner Advisory Services report ranks location intelligence at the same level of importance. One of the most promising use cases for IoT-based location intelligence is its potential to streamline traceability and inventory management compliance workflows in highly regulated manufacturing industries. In the coming years, expect to see ERP and Inventory Management software vendors launch new applications that capitalize on IoT location intelligence to streamline traceability and supply chain compliance on a global scale. **Manufacturing and Supply Chain Management, including Inventory Management and Business Intelligence Competency Centers (BICC) are among the most powerful catalysts of IoT adoption in the enterprise.** The greater the level of activity across the 12 functional drivers of BI adoption defined in the graphic below, the greater the potential for IoT to deliver differentiated value based on unique needs by area. Supply Chain Management, including Inventory Management, is among the most active early adopter segments of IoT adoption, followed by Marketing, Sales and Strategic Planning. In the context of strategic planning, these twelve areas of adoption are synchronized to common data capture, aggregation, reporting and performance improvement goals. Supply chains are the lifeblood of any business, and serve to unify each of the twelve areas into a single, cohesive strategy. **Smart inventory management using IoT systems is the catalyst driving real-time visibility across inventory, warehouse, production and distribution centers, reducing inventory costs and improving predictive maintenance.** Strengthening legacy inventory management systems with the quality and depth of data that IoT sensors and systems can provide contributes to lower inventory carrying costs and reduced inventory management errors. IoT data integrated into the ERP system contributes to the overall system of record for any company, ensuring that the best possible data is available for decisions daily. The following graphic illustrates how IoT sensors and systems can improve inventory management at the shop floor level: Source: DHL, The Internet of Things In Logistics **IoT is generating four forms of financial value in manufacturing today, with inventory management & optimization emerging as a leading profit contributor.** Additional sources of financial value generated by IoT in manufacturing include greater operating efficiencies, Supply Chain Management (SCM) and predictive maintenance. Of the early IoT adopters, 88% see a competitive advantage from using sensors to capture additional data they hadn’t had access to before for streamlining supply chain and inventory management. CIOs and the enterprise IT staffs they lead are most often relying on reduced operating and support costs as the business case to finance IoT pilots aimed at improving inventory management. 37% say having additional IoT data on inventory management performance is the primary factor driving their business cases to finance pilots and full-scale production-level adoption. These findings are taken from Gartner’s Survey Analysis: _Top Digital SCM Take-Aways From Gartner’s 10th Annual SCM Technology User Wants and Needs Study_. **Conclusion** There are latent opportunities across the value chains of all companies, especially manufacturers, to improve their overall operations using IoT real-time data as a catalyst for improvement. Of the many areas where IoT can contribute and is beginning to be integrated into daily production, the most valuable is Inventory Management and Supply Chain Management. Inventory Managers’ greatest challenges occur when there isn’t enough data available to make an informed decision. There are also the continual challenges of tracking assets that haven’t been entered into tracking systems correctly and are often lost, then written off. IoT systems’ strengths include bringing greater tracking, traceability, quality management, compliance and real-time data on inventory positions. All of these factors contribute to a roadmap of value that every company can chart their course with by using IoT systems and technologies. Get our Inventory Management Systems Comparison Matrix. ](https://pmo.selecthub.com/ims-report-site-vers/?utm%5Fsource=selecthub&utm%5Fcampaign=comparison-report&utm%5Fcontent=highlight-block)

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 Originally published in August 2024 and last updated in April 2025\. Contributions from Louis Columbus.

## About the Contributors

 The following team members helped research, create, and review this content.

[ ](https://www.selecthub.com/author/louis-columbus/) 

 Written by  
[Louis Columbus](https://www.selecthub.com/author/louis-columbus/) 

Technical Content Writer

Louis Columbus has a diverse background that includes business strategy, marketing, product management, industry analyst, sales and technology leadership roles in start-ups and large-scale enterprises. He’s also an active member of the Enterprise Irregulars, a group of enterprise software analysts, bloggers, and executives. Louis also teaches graduate-level courses in business strategy and marketing at Webster and Loyola Marymount universities. He is a regular contributor to the Forbes.com as Enterprise Software Strategist and his own Software Strategies blog. Louis has published 16 books on a variety of operating system and software topics and spoken internationally on many aspects of cloud computing and enterprise software.

[See Full Bio](https://www.selecthub.com/author/louis-columbus/)

Tamoghna DasThe Top 13 Inventory Management Software Features & Requirements 

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