Internet of things and blockchain capabilities can help organizations better monitor, document, and derive enhanced value from far-reaching supply chain operations.
Complex global supply chains are ripe for technology-led reinvention, with the internet of things (IoT) and blockchain leading the way toward the creation of a digital supply network that listens and automatically responds to demand and supply signals. IoT can help organizations track and monitor physical objects journeying across the globe in real time via internet-connected sensors, while incorporating blockchain capabilities allows the extended supply network ecosystem to access product information in an immutable shared repository.
Together, IoT and blockchain can enable end-to-end transparency, improved accountability, and a single-source-of-truth view shared by various participants—setting the stage for more effective supply chain management. To achieve such results, CIOs and supply chain leaders can work together to explore functional applications of these technologies. Here are five core use cases that use IoT and blockchain to optimize capabilities as organizations evolve their next-generation digital supply networks.
Tracking. While many companies have made substantial supply chain investments, the ability to trace items across global networks is often lacking—yet consumer safety, corporate revenues, and company reputation are frequently at stake. Companies can capture relevant data, develop deeper insights, and quicken incident detection and resolution capabilities by leveraging IoT and blockchain in the following areas:
- Product provenance tracking. With IoT, companies can better track where products (or their components) originated and share this information on the blockchain, heightening transparency and potentially improving brand perception and loyalty. For example, food distributors could provide grocery stores with additional information about product ingredients, allergens, and other details that may help consumers buy with more confidence.
- Product journey tracking. Logistical challenges are common as items travel across the globe. For instance, shipping delays can degrade sensitive products such as medicines, wines, and fruits. Counterfeit items may even enter supply chains undetected. Using IoT and blockchain, organizations can track and share validated product location information—including concerning incidents or disruptions—far more accurately.
- Change of ownership and custody tracking. Suppliers, manufacturers, banks, insurers, freight forwarders, third-party logistics companies, and myriad other supply chain participants play critical roles in moving goods across the globe. As IoT sensors track the physical location of goods, smart contracts on blockchain can document the transfer of ownership and custody between parties.
Digital paper. Paperwork-related shipping complications, such as falsified documents or those riddled with manual errors, can introduce supply chain delays, losses, and other risks. This is especially problematic with time-sensitive shipments of products such as dairy, medicines, and meat. IoT-generated shipping information can be uploaded directly to the blockchain, resulting in digitized paperwork and automated validation and verification.
Quality certification. IoT-enabled manufacturing machines can capture increasingly granular metrics on production quality, deviations, and exceptions, which can help manufacturers improve and even automate quality verification and certification processes. Manufacturers can then use blockchain to share product quality metrics with supply chain stakeholders.
Contract performance. Organizations can use IoT-generated shipping and product quality information to guide predefined KPIs for their supply chain partners throughout the extended ecosystem. This can enable organizations to better measure and manage manufacturer and supplier contracts, provide more detailed feedback, and incentivize better performance. Moreover, organizations can use smart contracts to automate and simplify partner payments and other related processes based on performance.
Settlement automation. Blockchain enables direct peer-to-peer payment for goods and services, minimizing the need for banks or other such intermediaries. As such, the technology can reduce longer processing times and higher-cost clearinghouse processes for payments and invoices across borders. It can also reduce currency exchange risks by providing near-real-time settlement.
IoT and blockchain are accelerating the transition from the traditional linear supply chain to a digital supply network that can offer more transparent, instant, secure, and agile outcomes. These technologies can increase stakeholders’ operational efficiencies, speed up delivery, enhance product quality, and serve as core differentiators for organizations striving to innovate in order to satisfy customer expectations and achieve sustainable competitive advantage.
—by John Liu, managing director, and Peter Cannistraci, senior manager, Deloitte Consulting LLP; and Anant Kadiyala, director of blockchain and IoT industry solutions, Oracle