Both blockchain and Internet of Things (IoT) are powerful technological trends in their own right. But there’s a possibility of synergy. According to IDC predictions, around 20% of IoT devices will have blockchain enabled by 2019. The combination of these two technologies can provide valuable solutions for dealing with supply chain challenges.
Blockchain, IoT and Supply Chain
Blockchain: Blockchains are digital ledgers. They are the core technology behind cryptocurrencies like bitcoin, litecoin, ether, and others. You can imagine blockchains as decentralized databases. In a general database, you need a central authority for data integrity. This can become a bottleneck for running efficient and fast services. In a blockchain ecosystem, data is stored on decentralized nodes and there is no need for central authentication. Mathematical algorithms ensure the integrity of the data.
IoT: IoT devices are connected devices. Cameras, motions sensors, electronic scanners, heart monitors, etc., that are connected to the internet are considered IoT devices. Due to the lowering cost of electronics, these devices are showing up everywhere. Smart homes are using IoT. Manufacturers used to use proprietary connected devices. But more manufacturers are moving to generic IoT due to cost saving potentials.
Supply Chain: In recent years, there has been a shift in customer expectations. Customers have become used to high-quality products delivered fast at cheaper prices. So commodity producers and distributors are looking for ways to improve their supply chains. They have to reduce operating costs, manage risks, improve product quality and provide better customers service. As a result, companies are looking for better solutions.
The combination of blockchain and IoT can improve supply chains in the following ways:
1. End-to-End Real-Time Control and Visibility
Generally, products move through multiple supply chains. It complicates the process. Companies have to gather information from their partners to keep track of moving components. They have to wait for data from other parties to analyze any supply chain disruptions. The result is inefficiency and slow response.
IoT devices have helped companies access information in real-time. But companies are still restricted to their own databases. If IoT devices started writing the information on blockchains, it would allow multiple parties to cooperate and build a real-time flow of information across the global supply chain.
For example, certain pharmaceutical drugs require temperature control. If the drugs have IoT temperature sensors that write to a global blockchain, then it will become easier to monitor the integrity throughout all the transactions. As the drugs move from the manufacturer to the pharmacies to the patients, there will be an end-to-end verifiable record of temperature data.
2. Data-Driven Insights
When IoT devices record information on blockchains, it opens up new possibilities for data analysis. Businesses across the whole global supply chain share the same information. So everyone has holistic datasets for running machine learning algorithms. It provides new insights into possible solutions for improvements.
Today companies have to rely on simplistic data models. They don’t have enough data on the full supply chain. So the recommendations provided by the models are not smart. With IoT and blockchain-based systems, it will be possible to create more complex models that will be able to provide smarter recommendations. For example in temperature-sensitive pharmaceutical drug delivery, real-time temperature data can be combined with weather reports and traffic reports to optimize transportation costs.
3. Regulation Compliance
Pharmaceutical and food industries have high bars for quality assurance. They have to comply with the rules and regulations of different authorities. There are multiple storage parameters to keep track of. It’s time-consuming to record these data. Businesses have to spend significant amounts of time manually recording information and then replicating it to multiple databases. On the other hand, authorities checking the data have to invest significant resources to verify its authenticity.
Blockchains-based IoT data collection can make the process easier for both the businesses and the regulatory authorities. The food and pharmaceutical industry will save time and money monitoring products. And regulatory authorities will be able to verify the information faster.
4. ERP Integration
Enterprise resource planning (ERP) solutions play a vital role in helping companies better manage their supply chains. Integrating blockchain-based IoT solutions will increase the capability of ERP systems to provide a more collaborative platform with better granularity.
For example, Walmart is using their ERP solution with IoT and blockchain to track mango distribution. This system gives Walmart the ability to track a mango from its origin to the store. If there is a problem e.g. E. Coli outbreak, the company is able to recognize and segregate the contaminated supplies using their ERP systems.
5. Global Supply Chain Automated Transactions
Today most businesses have global components. It means companies have to deal with international payments. Every country has their own rules and regulations of financial transactions. It can mean a lot of paperwork and bureaucracy.
Blockchain-based IoT transactions can provide an automated solution to the problem. As more companies negotiate with countries across the world, they will be able to use IoT devices and blockchains to decrease the bureaucratic red tape.
For example, when products cross borders, companies might need to pay tariffs. It’s a time-consuming process. IoT sensors can help governments to check product volumes and other parameters automatically. Blockchains ledgers can work as the trusted paperwork between governments and businesses.
Smart contracts can further automate the process. Smart contracts are blockchain-based code that gets triggered when certain conditions are met. In the above example, businesses can pay the tariffs automatically through smart contracts.
Enterprise-level businesses have already started to experiment with blockchain and IoT devices to improve their supply chain. The world’s largest shipping company Maersk is using blockchain for their cargo. Both UPS and FedEx are involved in Blockchain in Trucking Alliance (BiTA) to improve their shipping businesses. Blockchain and IoT can help raw material producers, manufacturers, distributors, retailers, and anyone who has a stake in supply chain management.
If you need help figuring out your supply chain requirements for a blockchain and IoT implementation, our experts at IoTCoreSoft are ready to help.
Contact us today.