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The real value of IoT in supply chains

As digital technology becomes ever more commonplace, the Internet of Things (IoT) is becoming one of the most valuable supply chain tools. But how does it improve transport and logistics? And how is IoT used in state-of-the-art supply chains? Spoiler alert: scanners and sensors are only part of the picture.

Connecting the unconnected

Morse's first Washington-Baltimore instrument, 1884*

Samuel Morse was a 41-year-old artist when he overheard two men talking about new discoveries in electric magnetic technology aboard a ship sailing between Europe and America in 1832. His subsequent fascination with this technology would lead to the invention of the single-wire electric telegraph – widely considered the world’s first interconnected device. It was a groundbreaking discovery and the catalyst for a revolution in machine communication. 

It would be an understatement to say that a lot has changed since then. Today, almost 200 years later, we live in a connected world. We can send or receive any kind of message, or any piece of information, from the palm of our hand. Connectivity is so prevalent it’s taken for granted.  

That’s not the case in many of today’s supply chains, although it should be. For some two decades, the business world has been discussing the benefits of an Internet of Things (IoT) – a network of automated smart-enabled devices communicating with one another without manual (human) input. We’ve been asking ourselves how we can merge informational and operational technology to improve all kinds of industrial, manufacturing, and – yes – logistics processes.

Here’s the thing: we already use IoT to improve transport and logistics. But many people – including corporate supply chain managers – aren’t aware of just how established IoT technology is. And that means they’re not taking advantage of it.

IoT in numbers


Predicted worldwide spending on IoT by the end of 2022.

$40 billion

Spent globally on IoT in transportation and logistics in 2020.


IoT devices owned on average per person globally in 2020.

100 billion+

Devices predicted to be connected to IoT by 2030.

IoT – a (very) brief history

We have come a long way from the first telegraph machines of the 1830s. The internet was born in the same year that Neil Armstrong first stepped on to the moon’s surface and famously declared “one giant leap for mankind.” On October 29, 1969, NASA’s ARPAnet (considered the first workable internet prototype) sent its first message: a “node-to-node” communication from one computer to another.

It took over a decade before the first truly automated IoT device was invented. In the 1980s, university students connected a campus vending machine to a remote network using microchips to keep track of whether the machine was full or if the cans were cold. 

Nowadays, more than a few leaps and cans of soda later, machines and humans are more connected than ever. 

There is no shortage of examples of how IoT already impacts our lives, but a smart heart rate monitor is a good example. This connected device continuously feeds your current pulse to an app on your phone. It can also transmit data to an external network. While athletes use them to track their fitness levels, doctors can monitor their patients’ health. 

The amount of data collected from IoT devices today is mind-boggling. In 2020, it reached 44 zettabytes (44 trillion gigabytes) – and it’s doubling every two years. 

IoT in supply chains today

Five years ago, the Internet of Things was a satellite, low-impact trend on the Logistics Trend Radar – a development to keep an eye on. Well, that’s precisely what we’ve been doing, not to mention integrating the latest innovations, such as the SmartSensor, into supply chains. Today, IoT has an enormous impact on logistics, providing unprecedented transparency, and transforming what we can achieve. 

Shipment monitoring: IoT is a key enabler of security and loss prevention of customer goods.

IoT has played an essential role in the pandemic, for example, where billions of highly temperature-sensitive vaccines have been shipped around the world. We have used our connected network to safely deliver over 1 billion COVID-19 vaccine doses to 160 countries.

The driving force behind this uptake is not new devices but new digital means to connect them. This includes advances in cloud data storage, artificial intelligence, and cellular networks. A study by P&S Intelligence found that, as of 2020, IoT in logistics was a $35 million industry with a 13.2% growth rate predicted for the next ten years, particularly in the APAC emerging markets. Increased cellular connectivity and 5G rollouts are likely to be a big part of this growth.

IoT in logistics is no longer a far-fetched fantasy or a buzzword thrown around by tech companies. And it’s way more than scanners and sensors. The scale of what’s possible right now is far greater than that. Digital platforms and cloud-based solutions bring together global networks of connected devices, making automated communication and collaboration a reality between countless “things” across global supply chains.

The DHL IoT Experience

Learn more about IoT in supply chains and logistics – including real case studies of IoT in use – by watching The DHL IoT Experience.

How IoT improves logistics

IoT in logistics is an ecosystem that harnesses traditionally unconnected assets and objects, turning them into tools for creating new solutions that benefit the entire supply chain. But how exactly do you build an IoT ecosystem? 

It starts with attaching IoT devices and sensors to your assets, like warehouse roller cages and bins. Then you need to be able to talk to them. That’s where networks and infrastructure come in – using everything from cellular-based solutions to RFID and other connectivity technologies. Once you can communicate with your assets, you need to feed the data to platforms and databases so that you can visualize the information. 

The IoT Ecosystem

A setup of different technical layers is required to connect our assets and objects.

But it doesn’t stop there. In fact, this is where IoT comes into real play. Now that we know where everything is and what condition it’s in, we can use the latest applications and analytics solutions to create insights into the future – predicting what could happen next and prescribing possible next steps. In other words, IoT delivers the resilience everyone has been talking about in recent years. 

What’s more, the price of this technology continues to drop. IoT devices have always been relatively affordable, but the latest innovations are bringing the price point down further. They are getting smaller and using energy harvesting or new battery chemistries, such as zinc-polymer rather than lithium-ion. This means we can now get excellent device lifetime, high functionality, and a low price – a normally unattainable triangle. 

IoT technologies are not only getting smaller and smaller but also offering global connectivity. Technologies like low-power global area networks (LPGANs) utilize low-earth orbiting satellites (LEOS) to connect remote areas of the world that were previously black holes in the supply chain.

As you’ve undoubtedly noticed over the past couple of years, supply chains are highly volatile. This makes supply chain visibility more vital than ever, regardless of whether goods travel by air, ocean, road, or rail. IoT provides that visibility, which allows you to monitor the location and condition of items across your supply chain but take preemptive, actionable steps to ensure things arrive on time and where they need to be, no matter what is happening across the supply chain. 

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IoT solutions in supply chains

Businesses and organizations that invest resources in researching and implementing practical applications for IoT are the ones leveraging the full potential of the trend. The shifts away from “offline” methods are already fully underway. For example, global IoT spending in transportation and logistics rose from $10 billion in 2015 to $40 billion in 2020. With the current rate of technological development and all indicators pointing to steeper growth in the coming decade, disconnected structures and methods are becoming uncompetitive and will soon be obsolete.

Let’s look at some of the individual IoT solutions in use right now.

Facility condition monitoring

Monitoring environmental conditions is a key use case that demonstrates the time- and resource-saving value of IoT. 

Knowing the conditions along the supply chain has always been important. If a product needs to spend some time in a warehouse, for example, you want to know what the temperature is inside that facility. Until recently, monitoring a facility was a manual and time-consuming process. Someone would have to visit the devices distributed around the building to download the data.

IoT has changed this. The latest devices are now connected using low-powered wide-area networks (LPWANs), transmitting information in real-time to a central platform and the customer. And you can set up your system to automatically send a message to the customer if there are any variations in temperature or humidity.

At a strategic level, this data could be used to assess general conditions in warehouses and inform future decisions about their maintenance. 

Cold chain monitoring

Speaking of strategic solutions, the Covid-19 pandemic has put IoT to the test – and it passed. With the unprecedented rush to develop vaccines came the demand to deliver them quickly and safely worldwide. When BioNTech announced its vaccine needed to be transported at -70°C, it was up to logistics companies to develop solutions to provide end-to-end visibility on vaccine cold chains.

Much like facility condition monitoring, cold chain monitoring involves the use of connected devices to track each individual shipment and monitor its condition along the entire journey. 

Beyond vaccines, many pharmaceutical products don’t do well in hot and humid conditions. That means they have to be transported and stored in temperature-controlled environments. But customers need to see that their products stay within a specific temperature range – even during inspection or loading and unloading. IoT devices record and report conditions based on customer requirements, with the system flagging deviations detected outside the prescribed parameters. 

That visibility ensures product stability, not to mention precise reporting for things like audits. With more and more drugs and treatments being developed that require lower and lower temperatures, we think the value of IoT in cold chain logistics is only going to grow. 

Shipment monitoring for security and loss prevention

Today’s shipment monitoring goes well beyond simple track and trace. IoT is becoming a key enabler for security and loss prevention in logistics and supply chains. We can now monitor items as they move around a warehouse or distribution center as well as across the entire supply chain. When everything is networked and online, we can observe a shipment from the moment it is picked up to the moment it reaches its final destination. 

Devices using GPS technology have been around for a long time, but it’s only recently that they have the capabilities to add real value to logistics. Small sizes, long battery lives, and strong signal strengths have made them a perfect solution for quality control and loss prevention in small package shipping. Today’s devices come in all shapes and sizes and can detect temperature, humidity, light, vibrations, etc. 

For example, using a light detector, we can tell if unwanted light is inside a package. This indicates that the package may have been damaged or tampered with. 

Today’s devices are so small that people don’t even recognize them or know they’re in there. In the case of theft, IoT devices can support the investigation and help locate the missing goods. 

Next-generation freight stations

IoT is changing the way warehouses and distribution centers operate. Beyond monitoring conditions, both passive and active scanning technologies are revolutionizing how inventory is recorded and located. 

Handheld scanners are slowly becoming obsolete as small golf-cart-sized vehicles travel the aisles, loaded with sensors, reading RFID labels on the freight as they drive by. Forklifts fitted with the same devices can capture locations any time a pallet is moved. And using an overhead dimensioning system, forklift operators merely need to drive through the system to scan the size and shape of their cargo to ensure it fits the intended location. 

Smart labels with RFID chips and innovative uses of IoT are making it all possible. The goal is to make freight intelligent and automate all facets of the supply chain. With IoT, the cargo itself is self-updating the system, giving you immediate visibility. With rules and exceptions to trigger flags and notifications, the possibilities are endless. Lost freight will become a thing of the past. 

IoT delivers transparency and resilience

A tour through the DHL Innovation Center, the heart of DHL’s research and development activities.

As a result of the development and implementation of connected devices, information in logistics is no longer a commodity but a constant. IoT solutions add strength and resilience while shining a light on every milestone in the supply chain, providing managers with the data they need to carry out daily operations and make well-informed strategic decisions. 

The two positive outcomes of this are resilience and transparency – key benefits that have driven many businesses to invest time and resources in IoT in recent years.

Stable, adaptable solutions make it possible to seamlessly scale operations without entirely restructuring them to fit shifting demands. Moreover, IoT technology takes the physical and time pressures off employees. It’s no longer necessary to cross an entire warehouse to check on operations or stock levels. Smart shelves and sensors keep warehouse managers informed in real time, and sensor-equipped transporters like EffiBot keep pickers from carrying heavy loads. IoT means a more empowered and efficient workforce – people who no longer need to overexert themselves physically (risking injury or fatigue) as much as they once did. 

Nowadays, with IoT solutions more widespread than ever, there are very few, if any, weak links in the supply chain. This means maximum visibility and accountability for employees, managers, and even customers, no matter where you operate in the world. 

Future-proofing supply chains

Logistics companies should no longer be flirting with a future in IoT. Instead, we should be embracing it. From a single, sensitive item express shipped across the Atlantic to global warehouse networks and production supply chains, we must constantly look for new ways to connect the unconnected and maximize transparency. 

The potential of IoT is far from fully tapped. The trend will continue and, in doing so, transform entire supply chains. Whether you have products to ship or are in the shipping business, there has never been a better time to experience the real value of IoT in your supply chain.

Published: May 2022

* Image from 'Early History of the Electro-Magnetic Telegraph' by Alfred Vail via Princeton University.

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