IoT and Blockchain for Supply Chain

Mark Miljkovic is a technology journalist. He started with a degree in transport and traffic engineering but quickly became obsessed with everything digital. Contributing to a more informed world he writes about blockchain, cybersecurity, and digital entrepreneurship.

Managing supply chains is becoming increasingly complex. Part of the problem is that there’s no central system used by all companies. Traditional management systems have to tie in data from several different systems and formats. It complicates the whole process.

Most companies agree that a centralized system would speed up the process. What they can’t agree on, though, is who should foot the bill. To manage a centralized system using conventional technology is prohibitively expensive. 

That’s why the development of blockchain technology is viewed as a game-changer in the supply chain industry. The decentralized nature of blockchain technology cuts the infrastructural costs of maintaining a centralized supply chain database significantly.

Improving Supply Chain Logistics Using the Internet of Things (IoT)

Savvy companies have been developing blockchain-based systems to better manage their supply chains. IoT could take these systems to the next level.

How?

Smart sensors are being used to collect data along the supply chain route. These sensors can monitor things such as:

Environmental conditions: This ensures that goods are transported in ideal conditions all the way. This is particularly important in the food industry.

Where delays are occurring: Sensors are used to check how long the cargo stays at one particular point. You can now pinpoint which truck or port your goods are at, and how long they will stay there for.

Tampering: Sensors can verify whether or not the containers have been tampered with.

Using sensors directly connected to the internet gives companies real-time data. This, in turn, helps them to optimize their routes and efficiency. They can clearly define where the issues within the chain are and work at resolving those issues.

This technology will also help companies get the evidence that they need for insurance claims and contract disputes.

The use of IoT sensors can improve efficiency and transparency for companies in the supply chain industry. 

Is the IoT Capable of Handling Such a Broad Application?

Ten years ago, the answer would have been a firm, “No.”  Today, the answer is different. The explosion of the IoT market is a testament to how much advancement we’ve made in technology in recent years.

In 2015, there were 15.41 billion IoT devices globally. At the end of 2019, this figure increased to 26.66 billion devices globally.

By 2025, we’re looking at around 75.44 billion devices in total. That’s an average of ten IoT devices per person worldwide.

The Internet of Things is already here, and it’s more than able to handle such a broad application.

Using a centralized database will streamline supply chain processes. The benefits of blockchain technology don’t stop there, though. 

Blockchain and Product Sources

With blockchain technology, suppliers, purchasers, and the end-user can track each stage of the product’s life cycle. They’ll be able to, for example, monitor the journey of coffee beans from the plantation until they’re stocked on the store’s shelves. 

Smart Contracts

Blockchain technology makes it simple to effect cross-border transfers. The use of smart contracts can ensure that trading transactions are processed automatically. A smart contract is essentially a piece of computer code based on an If/Then principle.

One party funds the contract. The other party only gets the funds if they fulfill the terms of the contract. The contract executes automatically.

Final Notes

Could Blockchain and IoT technology cause further disruptions in the supply chain industry? We’ll have to wait and see. The chances of them doing so are good, though. Since both technologies are so new, no one knows what exciting developments are in store for us.