Improving Warehouse Inventory Management Using IoT

How can warehouses be more efficient? The answer begins with having a detailed understanding of the current state of the system for warehouse inventory management.

Warehouse inventory management is the process by which inventory is received, tracked, organized, sent out, analyzed, and forecasted throughout a warehouse. As a company’s business grows and subsequently their inventory grows, the complexity of managing an ever-changing inventory of goods increases. In the online age where requests, fulfillments, inbound shipments, and outbound shipments now happen faster than ever, IoT has the ability to address the pressing need for greater control and visibility on warehouse inventory activity.

The Challenge

A common question that managers of warehouse inventory have in their minds is: how can our warehouse be more efficient? The answer for finding efficiencies begins with having a detailed understanding of the current state of the system. From there, we can analyze the system from several different aspects.

Where is my inventory? Do I have trouble finding inventory in the warehouse?

How is my inventory changing? What is coming in? What is coming out? Am I managing and forecasting demand properly?

Is my space efficient? Is my inventory being stored in the most efficient way? Is space being used to minimize time to pick?

Is my equipment operating correctly? Is there any downtime due to a breakdown in equipment or operations? Can it be avoided?

Am I storing inventory properly? Is my product being stored correctly to prevent damaged goods?

These challenges in warehouse inventory management can be addressed with traditional methods–ranging from paper records to computer inventory management software. But as inventory and operational complexity in the warehouse increases, IoT may be a more effective means of tackling these issues.

The Solutions

A benefit of IoT is the sheer diversity of sensors available and the resulting variety of data points which can be measured. Using different devices equipped with sensors designed to collect and calculate different physical metrics, previously information that couldn’t be captured through inventory can now be observed.

For example, to track inventory–all incoming inventory can be marked with indoor positioning trackers, either by pallet, box, or unit. They can pass through a checkpoint at the receiving area to record in inventory software that the given tracker is associated to the piece of inventory. This indicates that the shipment has been received. Inventory can then be stored on the warehouse floor or racks by normal practice. The trackers, communicating to gateways with connectivity to the internet, can relay their position in the warehouse to an ingestion server and software platform that can show the location of that piece of inventory on the floor plan. This can allow pickers or other warehouse workers to easily see where a specific piece of inventory is located for faster retrieval. When inventory is picked and shipped out, the tracker is removed and disassociated from the inventory in software to indicate that the shipment has left the warehouse.

Position and movement data from these trackers can be used to identify not only where inventory is located, but also whether the inventory space is being used efficiently. By visualizing position and movement data from packages on the warehouse floor plan and plotting space usage over time (e.g. in a heat map), operations can identify if popular inventory is positioned to minimize retrieval time or determine if there is any unused space.

Sensors can be attached to warehouse machinery, such as conveyor belts and forklifts, to monitor thermal, vibration, and electrical performance and notify operators of when (or proactively predict when) a machine may need maintenance. In these situations, IoT can prevent unexpected breakdowns of critical equipment that could cause warehouse operations to slow down.

Lastly, for inventory that is sensitive to heat or moisture, sensors that measure temperature and humidity can be placed on racks or in storage units that the inventory is held. This allows operators to ensure that the storage conditions are suitable and set alerts if certain thresholds for temperature or humidity are exceeded. Similarly, pressure sensors on storage racks can be installed to monitor weight distributions and send notifications if any imbalances are detected or weight thresholds are exceeded. This reduces the chances for workplace injuries and damage of inventory.

Join our Weekly IoT Newsletter

The Technology

Asset tracking solutions for warehouse inventory management come in a variety of flavors in regards to functionality and connectivity. Most sensors or beacons are in a small form factor and rely on internal batteries for power, making them portable and easily attachable to pallets or packages. Given that GPS does not work well indoors, many solutions have moved towards other means of positioning for warehouse settings. This includes beacons based on Bluetooth Low Energy (BLE), infrared, or ultrasonic positioning. Sensor qualities worth assessing are the overall cost per unit, form factor, battery life, and position accuracy. These trackers communicate with gateways that relay that position information to an IoT integration platform over the internet, where data can be parsed, analyzed, and visualized. Data from the IoT platform can also be fed into existing warehouse inventory management systems or other systems of record.

Sensors for monitoring equipment or physical environments such as heat, humidity, pressure, or vibration must get their data to the cloud in order for data to be consumed by users. Once the data is collected and calculated by the device, the device can transmit this data to the internet through a variety of wireless protocols. Transmission can be sent to gateways using protocols like LoRaWAN, Wi-Fi, or Bluetooth, which in turn backhaul the data to the internet via cellular or ethernet. The devices themselves can also send the information to the cloud directly if it has a traditional cellular (3G/4G) connection or NB-IoT connection.


In warehouse inventory management applications, IoT sensors can capture previously untapped data points on inventory such as the real-time location and movement of goods. They can also provide meaningful data on the physical warehouse space such as floor plan usage, equipment maintenance status, and storage temperature. This information can feed into IoT integration platforms and data analytics software to give user the ability to make faster, more proactive, and more informed decisions. As a result, IoT has great potential to improve the inventory management process by empowering warehouses with valuable insights to improve the efficiency and productivity of their operations.