How easy life would be if there were weight operated warehouse devices which could automatically sense when the stock is getting over? Even better would be to know the health, whereabouts and condition of goods transited from suppliers. Sounds interesting right?

The Internet of Things (IoT) is the interconnection of everyday devices or machines which transmits data over the internet either of an event, people, technology or process. The data which is automatically transmitted is analyzed and can trigger any event. So, IoT is a fact which procurement professionals cannot ignore in the coming years.

The business Insider estimates that IoT will add $1.7 trillion in value to the global economy by 2019. According to Gartner, there will be nearly 26 billion devices on the Internet of Things by 2020.

There are many real life examples were IoT is evident. For example Rolls Royce has inserted chips in its aircraft\’s to give real time updates on its condition and need for repair or maintenance which also ensures the right parts, equipment and personnel are delivered at the right time and at the right place. Another live example is where companies are building light bulbs that also tells them when they are going to wear out and also let business owners know if there are any parking space so that they can save energy.

In Procurement, IoT will help companies gain visibility in their spending and also to analyze the suppliers and equipment’s they use, which will help them in improving their catalog content. It also gives visibility on the company’s employees and the purchases they make and helps to use the information wisely by knowing exactly what is needed and what is being used. IoT can also help in contract management by helping legal personnel’s create and phrase contracts with their suppliers and also alerting them about the expiration of the contract. It will also alert them about any financial risk against the company. It will update the company about new suppliers which will be useful for the business and directly sending an invitation after the necessary approvals. It will also alert owners if any of the suppliers are not fulfilling their contractual commitments.

To conclude, all companies should upgrade their systems to adjust to the IoT as it still do not have a greater bandwidth, but it can certainly add a lot of value to Procurement.