IoT and blockchain are changing the supply chain – so consumers and businesses can benefit
Supply chain management is an intricate area involving multiple business challenges, from falsified data to counterfeit and smuggled items. While entrepreneurs in different industries have been putting various efforts into maintaining supply chain transparency, this ongoing process can be pushed up a level with the help of technologies such as IoT and blockchain.
When jointly used – as various examples attest – these technologies allow enterprises the ability to track and trace goods across supply chains, detect frauds and perform activity audits.
“Supply chains are all about efficiency,” explains Stefan Haase, director of growth strategy consultancy Whitecap Consulting. “Every stage of the chain adds cost as more and more activities and parties take their share. Inefficiencies in the global supply chain cost UK companies nearly $2 billion, due mostly to the requirement for costly and potentially unnecessary telephone and email communications between parties amounting to a game of ‘telephone.’”
This is where blockchain and IoT play an important role.
Blockchain is an unalterable and inconvertible data record, where all communications between IoT devices are logged systematically and saved in the history. This gives a manager the power to find any kind of information in an instant. Take the fishing industry and food supply chain; dates when the fish was caught, registered, and sold will all be there, tracing its way from the sea to table. Blockchain also prevents data distortion with the help of cryptographic algorithms. Each block consists of a hash to the earlier block, which makes it impossible to substitute an intermediate block in the ledger.
In order to enable safe data exchanges, IoT devices can leverage smart contracts to create an online agreement between all parties wherein the terms and conditions are converted into codes instead of regular alphabets and letters. Hence, companies attain autonomous functioning of smart devices without any need for a centralised authority or a single administrator. More importantly, both technologies can be used to minimise paperwork across various cases, including customs declarations, cross-border shipping cases, transaction records, and various document and data flows, saving labour costs and ensuring data protection.
It is not that only the businesses who will be able to reap the benefits; consumers too are benefiting from increased visibility of their deliveries with quicker and more efficient updates on status.
Haase cited cases involving Dutch supermarket Albert Heijn, tracking orange juice, as well as startup Block Verify, to judge how consumers gain advantage. “There are huge implications for provenance allowing supermarkets and customers to know exactly which farm bred their meat for instance or to verify the authenticity of goods with positive implications for instance in the battle against conflict diamonds,” he said.
A Gartner survey predicts the global supply chain management market will grow from $13 billion to more than $19 billion by 2021 powered by technology such as IoT, smart contracts, machine learning and blockchain.