How Blockchain and IoT Will Revolutionize Supply Chain Management
Want to learn more about the future of supply chain? Check out this post on how IoT and blockchain technology can revolutionize supply chain management.
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Supply chain management is a large, complicated area that has various challenges. For many years, businessmen in different industries have been working on providing just-in-time safe delivery and supply chain transparency.
Blockchain technology has great potential to transform supply chain management. By storing and managing supply chain data and allowing decentralized autonomous transactions, it can help companies ensure customer trust and data security over disparate supply chain partners.
What Is Blockchain Technology?
Blockchain is a distributed ledger that maintains a continuously growing number of transactions and data records. In fact, it is a technology of decentralized data storage that provides a high-security level and data manipulation, according to predefined rules.
Representing an inconvertible data record, blockchain ensures the security of financial transactions and data exchanges, also providing users with data access and enabling them to monitor transactions’ completion. A user can be sure that his or her personal information won’t be stolen or compromised.
Another advantage is that blockchain is based on cryptography, which makes data forge impossible. Each block includes a hash to the previous block, making the substitution of an intermediate block in the chain impossible.
Also, a network’s distributed nature requires computer servers to come to a consensus that allows transactions to be carried out between autonomous distrusting parties.
Blockchain in Supply Chain Management
A blockchain-based supply chain management is built on the idea of a shared distributed ledger that provides an immutable record of all data related to package/container/product/truck status, location, and food storage conditions, as well.
In a new survey from Business Insider Intelligence, they analyzed an increasing role of blockchain technology in the IoT ecosystem. Here are the main findings:
- Blockchain has many use cases throughout the Internet of Things. Companies are creating innovative solutions that use the technology to reduce costs and improve their services.
- While blockchain solutions address a plenty of potential pain points in the IoT network, there are some issues that could prevent its widespread integration. These challenges involve blockchain's complexity and hardware requirements.
- Blockchain is poised to provide a new, powerful tool for companies building and deploying IoT solutions, as well as providing enhanced versatility, security, and efficiency.
When being integrated with the IoT, blockchain offers logistics to companies' delivery speed and cost savings across a variety of applications. When we see logistics as the process of getting things from A to B and add the aspects of autonomy and transparency to it, we come to an innovative approach that brings security and optimization.
Blockchain and IoT for Supply Chain Management
IoT and blockchain can push supply chain management to the next level. Imagine how the transportation process can work — multiple sensors track things like location, delivery stages, and food storage conditions (temperature, humidity, etc.), and blockchain provides decentralization, thus, removing the need for intermediaries.
Blockchain represents an immutable digital data record, where all communications between IoT devices are recorded and saved in the history. So, a manager has the ability to quickly find any piece of information, for instance, dates when the fish was caught, registered, and sold, and trace all its way from ocean to table.
Also, blockchain technology is based on cryptographic algorithms designed to prevent data distortion. Each block includes a hash to the previous block, so it’s impossible to substitute an intermediate block in the ledger. That’s why blockchain can solve most of IoT security issues.
To enable safe data exchanges, IoT devices can leverage smart contracts to create an online agreement between all parties, where the terms and conditions are written into the lines of code. Thus, companies achieve an autonomous functioning of smart devices with no need for centralized authority or a single administrator.
The minimization of paperwork is another case where blockchain and IoT can be combined and provide great results. The transportation of a container from A to B often involves over 30 different parties, with more than 150 interactions between them. As many companies are still using traditional ways of doing business, a strong need for paperwork remains.
By removing paperwork across various situations, including customs declarations, cross-border shipping cases, transaction records, and various document/data flows, blockchain and IoT allow to save labor costs and ensure data protection.
Today’s customers are highly concerned about fair transportation practices and fast delivery. This leaves companies with no choice but to enhance their supply chain traceability. Additionally, they stand to gain significant operational advantages with improved visibility initiatives.
Blockchain offers a great alternative to cloud services and allows companies to reduce the complexity required to integrate and maintain IoT solutions.
Also, this technology offers different ways to accomplish improved data analysis, device connectivity, and even automation through smart preset rules, dynamic contracts, and ledger entries
As you see, blockchain and IoT have great potential to transform and innovate supply chain management by adding security, speed, and efficiency across a wide range of applications. Walking hand in hand, they enable control of supply chains, minimize fraud, and prevent operating mistakes.
Published at DZone with permission of Diana Maltseva. See the original article here.
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