Six Important IoT Applications for Retail Procurement

Written by Yau Wai Mei, DPSM

by Yau Wai Mei, DPSM

Digital Transformation is riding the next wave of innovation in the retail industry. A network of the collaborative Internet of Things (IoT) has become an essential technology in the retail industry as IoT gets the best success by their cost-effectiveness and efficiency while processing data. Do we really know how exactly IoT applications can possibly be adopted on retail procurement?

In the retail industry, the procurement operation is running in a high-visibility, consumer-focused environment. In order for retailers to be successful in a heavily competitive marketplace, they must adopt advanced procurement strategies and IoT applications that go far beyond the traditional focus on cost savings efforts alone.
The IoT is helping digitally transform retail businesses where data needs to be collected from a number of devices that are not easily accessible or are difficult to continually monitor and repair.

There are several IoT applications which are important to be applied on retail procurement. Some of these include Smart Shelves; Smart Stores; Smart Transportation; Preventive Equipment Maintenance; Smart Warehouse; and Beacons.

Smart Shelves Automate Stock Replenishment

IoT based shelves like Smart Shelves can help to track the real-time the status of the product quantity on each of the shelves. It helps the staff to refill the empty space on the shelves immediately with the required product. Moreover, the purchase process can be automated on behalf of particular products and make sure that they never run out of stock. The RFID tags on the goods contain an integrated circuit and a microchip antenna that transmits data to the RFID reader. Information is collected from the tags and then transferred through a communications interface to an IoT platform, where the data can be stored, formatted, and analyzed.

With the help of smart shelves, employees’ time and energy can ensure they are never out-of-stock, and the items are not misplaced on various shelves. Smart Shelves are introduced to automate both of those tasks, while simultaneously detecting potential theft. Moreover, smart shelves are fitted with weight sensors and use RFID tags and readers to scan the products on both display and stock shelves.

Smart Store Estimate Demand and Supply

IoT is also driving experimentation and innovation under the banner of the smart store, and this can start outside the boundaries of the store. Mall-based retailers are interested in measuring foot traffic and patterns in order to draw customers into the store. In the store, they want to measure traffic patterns and trip times and check-out queues in order to devise ways, such as digital signage, to encourage shopping while also improving the customer experience. Retailers can make use of IoT together with Point of sales (POS) and historical sales data to optimize product placements and shelf management. With the deployment of IoT technology and sensors, the connected devices are being transformed into smart devices and are generating massive and meaningful data. Through all these massive data, retailers are able to gain visibility into their spend analysis and keep a vigilant eye on their consumer’s consumption pattern. The supply chain data generated is monitored continuously and analyzed for behavioral sets to make better-informed decisions to estimate demand and supply statistics.

Predictive Equipment Maintenance Reduces Maintenance Cost

Predictive equipment maintenance will impact the maintenance costs incurred by the retail store, contributing positively to the overall cost savings. It is used to apply the sensors used for managing energy, predicting machine failure, or detecting other store-related issues. It is used for managing energy, predicting equipment failure or detecting other issues. For example, every grocery store has a lot of complex equipment as most people recognize refrigeration units. When these units are instrumented with sensors, we can predict maintenance issues that might affect power consumption for savings or monitor temperature fluctuations to ensure food safety. If these units are made smart using IoT can monitor changes in temperature, functioning and the impact of changes on stored items. If there is a malfunctioning noticed then repairs can be immediately scheduled and sudden outbreaks can be prevented.

Smart Transportation Optimize Transport Tracking

Moving merchandise efficiently is one of the goals of smart transportation applications in retail, and IoT can come into play with the maintenance of transport, tracking, and route optimization. There are many retailers have been using GPS to track and route trucks in the last couple of years. With IoT, we are able to understand to a much higher degree of accuracy how close a pallet of merchandise is to a given store. High-end IoT devices are no longer mandatory to track the location of shipments. When we combine the internet of things with GPS systems, we can track down the location of a shipment at a much more granular level. For example, the sensors offer real-time information on the condition and need for repair of each truck. Proactive action can be taken when the deployed sensors and tracking devices on their delivery trucks trigger when a truck may break down or have a failure before it happens.

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Smart Warehouse Streamline Processes

IoT solutions produce rich inventory data which is useful and essential for procurement to maintain stock level. Enhanced with RFID tags and sensors that enable data capture and goods identification down to the item level, IoT warehouse systems ensure a continuous flow of real-time information on inventory levels and location. Further benefits of implementing connected technologies within the warehouse include inventory loss and damage prevention, forecasting demand based on historical sales data, timely detection of load discrepancies, and bottleneck identification.

IoT enables workflow automation. The traditional step-by-step approach to filling customer orders involves capturing requests via a warehouse management system (WMS), allocating existing inventory to the orders, and manual picking. Order-picking robots, drone-based inspection and delivery, and head-mounted displays provide instructions to order pickers in a hands-free mode. Connected point-of-sale (POS) systems allow managers to seamlessly report order status and changes in inventory. As a result, the retail warehouse can eliminate inefficiencies stemming from the legacy approach to order processing, which involves manual labor and data entry, paper-based processes, and inefficient use of storage facilities.

Beacons Drive Better Quality Control

In the retail industry, Beacons help to assure product quality as it provides IoT based data in which allows better visibility on product condition. That is to explain why Beacons is becoming more useful and popular low-energy blue tooth devices to track products.

In the retail supply chain, or the time between when products leave the manufacturer and reach store warehouse can also benefit from IoT innovations.

The sensors and beacons on products in trucks are used to monitor temperatures and vibrations during transport. This is especially helpful in case of managing the transport of perishable commodities and delicate.

This strategy is essential for food and beverage products to protect from sudden humidity, temperature changes, or vibrations that could adversely impact product shelf life. Once the products reach the loading dock, the warehouse staff can better evaluate for product loss.


Retailers who are actively leveraging technology as a critical component can achieve a much greater level of spend and contract compliance, as well as a more transparent regulatory monitoring capability across all associated activities. As a result of these IoT application approaches, stakeholders have better alignment with procurement’s goals and accomplishments which are tied to wider corporate strategies.

Video Link:


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About the Author: Yau Wai Mei has substantive years of experiences in the field of engineering, and specifically in the semiconductor industry. She holds an Engineering degree and is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Wai Mei completed the Diploma in Procurement and supply management (DPSM) course on March 2019 at SIPMM Institute.