What is IoT and How it Affects ERP

What is IOT and How It Affects ERP

The Internet of Things (IoT) is a term I’ve heard a lot in recent years and never took the time to fully understand it’s meaning. So what is IoT? IoT is a network of physical objects that are embedded with software, sensors, and other network connected technology that allows the physical objects to collect and communicate data.

It's not as complicated as it sounds. You’ve probably experienced some IoT enabled devices already. Discover common consumer product examples of IoT below. 

Common Consumer Products

• Nest Smart Thermostat
• Amazon Echo
• Apple Watch
• Wifi Enabled Cars

Basically, IoT is everywhere. Products that we never imagined being network connected a few years ago such as lightbulbs and thermostats are now readily available at Home Depot or Lowe’s as part of the Smart Home trend. And it doesn’t stop in our homes – we are seeing IoT in nearly every industry including in smart cities, agriculture, retail, and healthcare. And we only expect this trend to continue, causing more and more physical products to be network connected.

IoT and How It Affects ERP

So how does IoT affect ERP in manufacturing? IoT has a lot of potential in the ERP in manufacturing world, including:

• When inventory of a certain part is low or out, re-orders through the use of network connected devices could be communicated to an organization’s ERP system without the need for human intervention.
• Machinery equipped with sensors could allow for manufacturers to receive warnings and notifications when products need attention or repairing. Taking out a lot of the need for human interaction will ultimately make lean manufacturing even leaner.
• There’s the potential for better understanding of customer behavior. If a manufacturing organization can communicate directly with products, manufacturers will be able to better assess how products are being used and if they malfunction.

It’s clear the IoT is here to stay and we should expect to see new advancements in technology on both the manufacturing shop floor and the ERP companies that serve those manufacturing companies.