New technologies such as blockchain and IoT (Internet of Things) are changing the way companies move goods and helping to enhance supply chain transparency. As we’ve seen with several leading retailers and port operators, there’s a renewed interest in disruptive innovations.
Companies are digitizing more than ever before and are harnessing new technologies in a bid to increase efficiency and improve the transparency of the supply chain. With a lack of quality data about shipment status a serious concern for all businesses, blockchain, and IoT can be implemented to improve efficiency.
First, these two technologies are inter-related and mutually reinforcing. IoT provides a vast quantity of data about supply chains. Blockchain, or distributed ledger, establish trust in data. Combining these innovations allow companies to better understand their complex supply chains and to gather vital business intelligence from it.
For instance, tiny IoT sensors could be embedded in products to enable the tracking and monitoring of shipments from one port to another. That data can then be encrypted and shared through the blockchain so that customers and suppliers have a real-time record of the transaction as well as the shipment status. Moreover, blockchain enables digitization of paper based processes, helping to save shipment time, increase trust, and reduce costs.
Enhancing supply chain efficiency with IoT
Data suggests that companies are ready to gain greater visibility into their supply chain through Internet of Things devices. Forrester report predicts that the track-and-trace sector of the IoT industry will have the largest spending growth—a 24.2% increase —on IoT devices between 2017 and 2023. This trend is expected to continue even as port operators around the world seek to bring efficiency to the supply chain with IoT.
An IoT-enabled supply chain would be more efficient and less risky. It would allow for true just-in-time production by guaranteeing inventory accuracy and, in turn, saving costs for all parties. Equally important, shippers can track the state of their container as well as other parameters such as temperature, humidity, weight and so forth.
Blockchain reinforces IoT
Tracking shipments in real-time using IoT is costly which is why companies should be testing blockchain at various levels to enhance supply chain visibility. There’s some skepticism about blockchain, including sentiments that the technology has fallen short. But the past few years have seen remarkable progress with this technology. In ongoing pilots, various industry players have reported achieving ‘milestone’ developments with their respective blockchain solutions. These include shippers, freight forwarders, carriers, ports, and others.
With blockchain distributed ledger, it is possible to track a variety of transactions, encrypt the associated data, and also make that data accessible from anywhere. This is critical to the supply chain sector since the implementation of blockchain promises to make shipping faster, cheaper and more efficient by increasing trust and reducing risk.
For example, early testing of the blockchain-based bill of lading system built by Maersk and IBM showed that it could cut administrative costs by up to 15%. This was made possible thanks to tracking shipping containers and eliminating paper documents.
Although blockchain is an enabler of IoT, lack of standardization means it may not offer much. There’s a need for relevant parties to set common industry standards that will ensure the technology is harnessed more efficiently. Once there’s a consensus on standardization, blockchain could fundamentally transform the supply chain industry now and in the future.