Efficient Inventory Management of Perishable Products by Utilizing Iot

GLOBAL IMMERSION PROJECT-2

Efficient Inventory Management Of Perishable Products by Utilizing IoT

MID REVIEW REPORT – TRIMESTER 3

AUTHOR

Akshay A Patil- MS18GL138

Under the guidance of

Dr. Rajiv Aserkar

SP Jain School of Global Management

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Abstract:

Managing inventory has always been a challenging and opportunistic area for inventory managers and the researchers, as the core domain of any businesses performance and its success is in its inventory management. Hence due to this reason it is very crucial to reach an efficient inventory management system which would be capable of optimizing cost, particularly in perishable inventory management. Perishable products need regular control and monitoring due to its different nature and also it deteriorates over a time period and its quality is affected by storage and transportation conditions. The development of revolutionary technologies including Cloud Computing, Internet of Things and Cyber Physical Systems has given inventory managers numerous innovative opportunities with pertaining challenges. This report contributes by an analytical study that reviews the most recent research and development efforts in utilization of IoT for management of perishable inventory. This analysis infers the opportunities which are yet to be fully realized, and then the challenges that are needed to be solved efficiently.

Contents

1.0 Introduction:        3

2.0 Statement of the problem:        4

3.0 Research Objectives:        4

4.0 Research Methodology:        4

4.1 Need of the study:        4

4.2 Research Structure:        4

5.0 Background:        5

5.1 Inventory Management- overview:        5

5.1.1 History:        5

5.1.2 A slow development of inventory management:        5

5.2 Perishable products:        7

6.0 Objectives of inventory management        8

7.0 Inventory management of perishable products        9

7.1 Traditional management of perishable inventory        9

8.0 Literature review:        10

1.0 Introduction:

Inventory management is one of the very important aspects of any product-based business. According to the U.S Census Bureau in June 2018 manufacturers, retailers and merchandise wholesalers carried more than $1.9 trillion in inventory. Wherein experts say that 90 percent of the company’s inventory is stationary; it’s stored somewhere, whether on the shelves of a retail store or racks in warehouses, while only 10 percent of actual company’s inventory is in transit. And hence owing to these statistics inventory management is very crucial to a company’s success. Another reason why inventory management is so important is that, inventory is considered as an asset, and as such is recorded on company’s balance sheet and hence it has been proved that improved inventory management leads to 20 percent of cost saving (Inventory management – Edward & David Pg. 4). In spite of the facts which reveal the significance of having an efficient inventory management system, only 54 percent of SEM’s (Small and Medium Enterprises) track their inventory while remaining enterprises merely employ ordinary methods or do not even track their inventories. Operation of inventory management determines the efficiency of storage of products and plays a vital role in manipulation of logistics as well. Managing inventory is essential to ensure that the optimum amount of inventory is held or stored for optimum time. This would eradicate the holding cost, outdating or the deterioration cost, shortages costs and the working capital issues.

It is commonly accepted that the inventory can be categorized into three main categories: (i) Perishable inventory: which means the inventory that degrades with time, either at a fixed rate, unfixed rate or perishes on a fixed date, such as dairy products, blood, medicines, processed foods etc. such products are very time sensitive and storage environment sensitive. (ii) Non-perishable inventory: it is the inventory that does not degrade or deteriorates and is solid such as clothes, home appliances etc. (iii) Service inventory: such type of inventory relates to intangible resources such as flight tickets, hotel rooms etc. The major focus area of this research project would be on perishable inventory.

In accordance to recent research, merely 33 percent of manufactures use inventory management software, the rest of 67 percent rely on Excel or paper based methods, which causes 88 percent error in spreadsheet calculation (Market watch journal 2018). In this scenario, introduction of Internet of Things and its integration with many software providing companies open a new gate to facilitate inventory monitoring and its environmental control which in future leads to full inventory visibility. In 2017, Garter analyst said in their research declared that “A third fold increase in internet-connected physical devices by 2020 will significantly alter how the supply chain operates” (J. Rivera and L. Goasduff, Garter 2017); as it was then predicted that in 2020 the IoT will reach 26 billion units which will be installed thus affecting the information collected from supply chains, opening new sights for managers and enable new strategies for supply chain operations and management. Adding to their points Garter also announced that IoT is currently used in fleets’ monitoring, tracking even in analytics and started emerging in manufacturing processes monitoring as well. By end of 2017, it was reported that GT Nexus and Capgemini found out that 70 percent of companies working in manufacturing and retail began to apply for digital transformation plan on their supply chain (A. Meola business insider, 2017).

2.0 Statement of the problem:

Costs related to inventory have a significant impact on the profitability of the company and its success. Inventory management, its efficient and optimized decision is depending on the identification of key success factors or drivers of inventory management and right decisions at right moment. In dynamic market and that too of perishable products which tend to deteriorate with time it becomes crucial to focus on the decision making and the factors influencing decision making in order to optimize the result of inventory function. The secondary research would help to highlight the variables and these won’t have biased information unlike the surveys. Testing of the factor influence on perishable inventory decisions by using scientific method can help us improve the reliability of the factors taken into consideration. Hence the present research will be focused on two dimensions namely identification of key drivers of efficient inventory management of perishable goods and study the role and application of IoT in inventory management. Both dimensions will be achieved by doing a thorough study and rigorous reading of the information available on internet, in academic journals, research papers and in books.