Despite sheer scale and worldwide coverage, modern logistics still faces a number of problems that have yet to be solved, such as tracking components along supply chains.
Part of the problem is outdated technology that leads to a lack of traceability and transparency, which make it difficult for businesses to make informed decisions. Without real-time updates, various entities within the same supply chain could generate significantly different data. The end result is typically mass confusion that often ends up costing large sums of money.
Craig Fuller, the co-founder of Blockchain in Transport Alliance (BiTA), said that there’s nearly $140 billion tied up daily in payment disputes regarding transportation. To make matters worse, it takes roughly 42 days for both parties to reach a settlement on an invoice. This is a lot of money for a company to have tied up in something that could be mitigated or, in some instances, solved completely.
The answer to these problems lies in the introduction of new technology-based systems, which aim to help reduce costs, increase accountability and ensure accurate data is being reported at every point in the supply chain.
Benefits of IoT-based technologies for logistics and supply chain
Of all the potential uses for IoT, the ability to track goods across a supply chain is among the most promising. Digital sensors can keep track of products in the supply chain from start to finish.
Consumer package delivery and several other industries have already widely adopted this means of tracking. It pushes delivery times and offers clarity in logistics. In fact, it’s this advanced type of tracking that makes services such as two-day and same-day shipping possible.
The potential of blockchain for logistics and supply chain
A number of big companies are keen to dive into blockchain technology. It has the potential to revolutionize the way businesses exchange information within the world of logistics.
In fact, BiTA already has roughly 500 members in more than 25 countries around the world. There’s $130 billion currently being stored in public blockchain networks and the value tends to grow. In order to fully understand the benefits of blockchain, though, businesses need to know what it has to offer the logistics industry:
1. Transparency of transactions
Lack of transparency prevents businesses from building trust and naturally leads to everyone trying to protect themselves. A solution can be found in private blockchain, where each involved party retains a personal copy of all the information, which cannot be accessed by outsiders or changed. As a result, the transaction history is kept transparent at all times and trust can flourish. For example, using blockchain for food traceability offers more visibility into where their food came from, or helps pharmaceutical wholesalers and manufacturers to combat counterfeit drugs.
2. Permission-based access for security
Traditional ledger systems open the door to malicious attacks because the information stored in a ledger can potentially be accessed and changed. Thankfully, blockchain technologies go well beyond offering accuracy. They also provide cryptography tools that keep data secure.
Blockchain-based systems have means of controlling and limiting access to information at various levels of a block. For example, companies can secure contact data so that only certain parties are able to access the information. Likewise, less sensitive data, such as weight or shipment size, could be left open.
3. Smart contracts
Blockchain technologies offer adoption of smart contracts, which automate legal negotiations throughout the logistics process. Perhaps the best-known systems to achieve this are developed by Hyperledger. These systems use smart contracts to monitor each step of the process. They can check for certain rules that are laid out within contracts to ensure that all of the parties fulfill their ends of the deal.
The great thing about smart contracts is that they give reliability to businesses on both sides of the chain. As a result, even smaller parties can participate in the overall process. This is important because it’s extremely difficult for smaller or startup companies to get into a supply chain. Traditionally, they would need backing from stronger, more reputable companies. A smart contract, however, ensures that all of the parties involved will complete the contract to its entirety.
4. Clarity in assets and order management
The digital ledger system of blockchain helps easily track and pair assets with claimants without agonizing over ownership. This record allows companies to deal with the verification and transfer of assets in a much simpler way than other modern methods can offer.
Blockchain technologies are nearly limitless when it comes to scalability. This means that even massive deliveries won’t suffer a bottleneck effect as a result. The importance of ensuring clarity is more important than ever thanks to the growing popularity of same-day shipment services. Meanwhile, companies that still use conventional methods risk getting left behind.
5. Real-time delivery tracking
Systems for real-time location tracking can be created by means of integrating IoT, blockchain and mobile technologies. You may check out this demo for an example. Based on Hyperledger, it allows the retrieval of GPS data and updates delivery statuses with new geolocations. Such systems are open to potential integrations with other IoT devices.
Overall, blockchain is capable of providing supply chain businesses with an edge. However, without a proper understanding of how it works and how to make it viable, companies might run into problems along the way that could hinder further growth in the ever-changing market.
Additionally, a lot of technology, infrastructure, governance and integration are required before blockchain and more sophisticated IoT technologies can go mainstream. However, those who wish to achieve this with a business-driven approach can expect to leave competitors behind in the long run.
All IoT Agenda network contributors are responsible for the content and accuracy of their posts. Opinions are of the writers and do not necessarily convey the thoughts of IoT Agenda.