How IoT Reduces Waste and Improves Supply Chain Sustainability

The Internet of Things (IoT) is growing bigger by the day for a reason. However, while many supply chain professionals have recognized its worth, its sustainability capabilities are largely overlooked. 

These internet-enabled devices could shrink the carbon footprints of both small businesses and large enterprises. 

The Sorry State of Today’s Sustainable Supply Chains 

The 2024 State of Supply Chain Sustainability report from the Massachusetts Institute of Technology surveyed over 7,000 supply chain professionals in more than 80 countries. It revealed that many struggle to make meaningful progress with their sustainability goals, especially concerning their Scope 3 emissions. 

Scope 1 refers to direct emissions produced during operation, while Scope 2 involves indirect emissions generated by utility providers — everything is contained within facilities or fleets. 

Scope 3 is more challenging to pin down because it consists of upstream and downstream activities, covering everything from the impact of investments to how sold products are used.

According to the report, the complexity of calculating a carbon footprint is a significant hurdle. Since supply chains are so massive and elaborate, their margin of error is enormous. 

This deters them from adopting sustainable strategies and investing in green solutions, so around 67 percent of organizations don’t have net zero goals in place. The remaining 33 percent that do are often unprepared to meet them. 

Reducing carbon output in transportation is essential because it has gotten out of hand. Research shows an average company’s supply chain emissions are about 11.4 times higher than its direct emissions. 

However, most firms have limited visibility into their extended supply network, so they only deal with Scope 1 and 2. They’re far from being net zero.

Ongoing labor shortages, demand volatility, transportation hurdles, and supply issues further complicate things. 

However, although improving supply network sustainability seems hopeless, it is not impossible — especially not with the latest IoT solutions. Organizations can overcome these challenges if they gain visibility into their operations and make data-driven decisions.

The Role of IoT in Creating a Sustainable Supply Chain

An IoT-driven supply chain has multiple advantages over a conventional one. It optimizes order scheduling, inventory management, and system performance, shrinking companies’ carbon footprint. 

This technology has an estimated 50 to 70 percent carbon reduction potential in low or high-demand scenarios, which is essential because shipment accounts for over 75 percent of total supply chain emissions. All these efficiency gains increase overall profitability by 30 percent. 

Whether you run a small business or a major enterprise, these internet-enabled devices can make your supply network more environmentally friendly while saving you money. It’s a win-win scenario. You can use it to optimize everything from your commercial fleets’ fuel usage to your storage facilities’ energy efficiency. 

Take lighting, for example. It’s a tremendous resource drain — especially now that robots do most of the picking in depots. According to the United States Department of Energy, it accounts for about 10 to 20 percent of a commercial building’s total power consumption. 

However, IoT occupancy sensors could drastically reduce that percentage. Storage areas would experience a 45 to 80 percent decrease, while warehouses would see a 50 to 90 percent reduction.

IoT can even shrink your supply network’s carbon footprint at the employee level. With metric-monitoring wearable devices, you can track their movements and behaviors better. 

Because environmentally friendly, scalable solutions exist, you wouldn’t need to invest in renewables or net zero power plants to charge those devices.

A thermoelectric generator powered by body heat converts heat flux — the temperature difference between hot and cold surfaces — into electricity. 

Thanks to recent advances in flexible electronics and miniaturization, internet-enabled fitness trackers that are powered by the waste heat from the human body are possible. This device is a testament to IoT’s ability to create new sustainability opportunities you wouldn’t have had otherwise.

IoT Tracking and Optimization Tech

An internet-enabled node can track and optimize resource usage in real time because it constantly connects to and communicates with other devices and systems. 

Sensors are ideal for up-to-date insights because they can gather information on everything from vibration to temperature. The latter is particularly beneficial for businesses relying on the cold chain.

IoT-generated data you analyze will improve your documentation and reporting processes, helping you track your progress toward your net-zero goals.

You can directly upload these continuously updating datasets to the cloud, helping stakeholders hold your organization accountable. This gives you more incentive to improve. 

The infrastructure behind a technology like IoT needs to be sophisticated. Ensuring interoperability is challenging but essential for seamless data transfers.

Software as a service (SaaS) acts as the foundation. It provides an accessible data analytics and device management framework, simplifying deployment complexity and enhancing scalability. 

Application programming interfaces (APIs) outline the rules that tell apps how to communicate, forming the next tier of technology supporting IoT infrastructure. 

They connect everything from business management platforms to payment processing systems, enabling seamless connectivity between apps. For reference, the average business has approximately 130 separate SaaS apps, demonstrating the need for APIs. 

If you’re trying to make real-time updates, seamless data packet transfers, and automation functionality possible with IoT devices, SaaS and APIs will act as your technological foundation. 

Of course, you can also leverage advanced solutions like artificial intelligence or collaborative robotics. Your integration options are only limited by your creativity and budget. 

IoT Data Analytics to Reduce Waste 

Today, most supply chain managers rely on outdated technologies, complicating communication and delaying decision-making. For instance, 67.4 percent still use Excel spreadsheets as their main management tool. 

While spreadsheets allow for co-authoring, they do not produce any passive value like internet-enabled sensors. When it comes to critical tasks like inventory management, IoT devices are a much better option. 

Improving the environmental friendliness of inventory management with IoT-powered data analytics is one of the most effective strategies available. 

In addition to significantly decreasing landed costs, it drastically reduces waste. When businesses can access predictive, data-driven insights, they don’t let products sit on warehouse shelves collecting dust. 

Seeing into extended supply networks will help firms perfect just-in-time inventory management, helping them drastically reduce indirect emissions. 

The CDP — an international nonprofit organization — estimated that Scope 3 accounts for 75 percent of all greenhouse gas emissions on average. This means business leaders could get three-quarters of the way to net zero by gaining IoT visibility. 

Progressing Toward Net-Zero Supply Chains

IoT plays a significant role in increasing efficiency, thereby shrinking the carbon footprint of companies’ supply chains. 

Whether they use it for monitoring or to generate data-driven insights, it enhances their decision-making processes, helping them make massive strides toward a net-zero future.