Supply Chain IoT Needs Blockchain For Full Functionality
A supply chain expert at iotworldtoday.com acknowledged that IoT has revolutionized supply chain management. Milind Balaji – senior supply chain manager at Georgia-Pacific LLC – revealed that with IoT, it is easier to understand where goods are, how they’re being stored, and when they can be expected at a specific location. But IoT really needs blockchain to effectively execute its function in supply chain management.
Hidden cost of opaque supply chain
According to Balaji, tracing and tracking goods are is a nagging concern. For example, manufacturers may ship their goods across the world, but they lack key data about shipment status and location as goods move from seaport to another port.
This lack of transparency is a big challenge, which affects efficiency and good decision making.
Balaji identified that the biggest problem facing the supply chain industry is visibility. He said, “We don’t know where things are.”
In some cases, political events or bad weather may delay product shipments. In other cases, a container may arrive with excessive moisture, thus damaging the goods inside.
Balaji mentioned, “If we had greater insights into the states of products and the location production, then we could store or route shipments differently.”
Such lack of visibility is a costly obstacle. According to Boston Consulting Group, guesswork about the estimated time of arrivals of goods or the location of containers costs the industry about $20 billion every year.
Why IoT needs blockchain
Balaji said that IoT connected devices could not help an industry whose data is majorly paper-based. For tracing and tracking to be accurate and fast, it needs to be digitalized. This is the reason why IoT needs blockchain to usher the supply chain industry into the modern era.
Balaji explained that blockchain could track various transactions, encrypt the related data, and make such data accessible from anywhere. Therefore, blockchain can digitize shipping supply chain data and make transactions more universal, standardized, and secure. Even people without credit cards could participate in blockchain-based transactions.
Early testing of blockchain indicates potential promise for industries like shipping, which is crucial to the supply chain sector. For example, a blockchain-based bill of lading (i.e., proof of shipment) created by IBM and Maersk in early tests showed that administrative costs could be decreased by about 15% of the price of shipped products. Thanks to blockchain technology for tracking shipping goods and eliminating paperwork. The elimination of paperwork could create savings of 1.5 trillion globally.
Balaji mentioned that digitization would bring efficiency and speed to supply chain operations. He said that blockchain would eventually be an enabler for IoT. Today, several manufacturers may not be willing to pay for truly-real-time IoT data and analytics, but rather opt for data that are less granular.
Of course, it can be expensive to utilize IoT to track shipments. Real-time tracking of shipping containers with IoT is today extremely costly for several firms. But Balaji revealed that people also take for granted the role of IoT. People often claim that they can find out where a package is without the use of IoT. However, the truth is that many people fear the cost of IoT devices for tracking their container shipments.
Balaji predicted that with blockchain, data would become digitized, more accessible, and less costly. He mentioned that ultimately IoT needs blockchain for more enterprises to get more access to data in truly real-time.
Balaji sees the digitization of the documentation in shipping as the biggest thing that is set to come in the industry.
However, Balaji said that it is going to take time for blockchain to become more mature and efficient. But blockchain could assist in solving some data accessibility challenges and data standardization, which have plagued IoT.