Blockchain and IoT in Supply Chain and Logistics: The Impact of Digitalization Trends

Blockchain and IoT in Supply Chain and Logistics: The Impact of Digitalization Trends

Welcoming digitalization is vital for all industries, not just for business expansion but to simply stay afloat. In addition, a customer-centric approach in global trade requires constant improvement of the quality of the user experience. Logistics is an example of an industry that has managed to successfully implement some of the most cutting-the-edge digital trends: blockchain and the Internet of Things. 

Let’s see how exactly these provident technologies of today’s rapidly evolving business era boost some of the logistics’ most problematic processes.

Blockchain Implementation

Though blockchain is a comparatively new technology, it has already implemented itself in many processes. Logistics and Supply Chain Management (SCM) have not become exceptions. Properly implemented, blockchain ensures optimization and prevention of issues throughout the whole line of crucial processes, e.g., goods delivery and certification, routes management, payment system, etc. Let’s take a more precise look at the current-date examples of contributions that blockchain brings to logistic and SCM processes.

Blockchain implementation in Logistics and SCM

Dealing with issues in the food supply chain

The main issues occuring in the food supply chain have to do with foodborne diseases. Needless to say that effective dealing with such issues is crucial for the suppliers’ reputation as well as their customers’ welfare. 

Though technological progress hasn’t yet provided an ultimate solution for the problem prevention, blockchain has become the revolutionary efficient way of quickly dealing with it. 

When foodborne infection or contamination takes place, food suppliers need to identify the source of it and exclude the corresponding product to prevent further spread as soon as possible. Time is more than money in this case.

Blockchain implementation makes food traceability clear and transparent. The information about the products’ characteristics, such as origin, batch number, expiration date, etc. are constantly available to all the participants of the food delivery process via the blockchain network.

Effective handling with bureaucratic issues in Container Shipping

Legacy container shipping requires a lot of human-institution interactions recorded by the means of voluminous paperwork and a great amount of time spent. This process’ architecture is not only excessively resource-consuming but also throws security at risk. With a massive flow of documentation and the human factor combined there is always a high probability of fraud or tempering freight documentation. Besides, let’s not forget about the cost which can reach 50% of the shipping cost. 

All these bureaucracy issues derive from the physical nature of the process and can consequently be solved by the digitalization of the latter. To that end, blockchain technology comes as a boost of existing IT systems. Specifically, the blockchain network provides shippers with a permanent opportunity of informational exchange with ports, customs, and each other via user-friendly and standardized interface. The data displayed on the interface can be easily and transparently reached by any participant of the shipping.

Goods provenance trackage

Counterfeiting and unethical products are two main problems that derive from poor goods provenance checking. The pictorial example in this case is the pharmaceutical industry where quality of delivered medications really is essential to the life of the final beneficiary. Still, goods’ provenance is a must in every field’s case. 

Blockchain implementation is a solution thanks to which the origin of goods can be reliably checked and confirmed at any link of the supply chain. The SCM system upgraded with the blockchain uses barcodes and auto-ID technology as products’ markers and tracks the goods’ from start to scratch of the delivery process. 

As a result, all the records related to the shipped goods are available to all parties. Hence, the blockchain integration allows to ensure the goods are not stolen or laid hold of in other unethical ways. Blockchain-based approach leaves no chance for any dubiousness in the matters of goods origin, originality, and authenticity.

Food delivery trackage via blockchain

IoT Implementation

The Internet of Things is another technology that suits the need of logistics for innovative approaches. In particular, the IoT solutions integrated to the SCM system simplified its adaptation to the higher demands of the globalized markets. 

As any physical object equipped with an embedded system will do for an IoT device, a transported good will also fit for the role. IoT sensors installed either on shipped products, or on shipping containers, ensure the real-time transmission of data to the parent organization’s connected devices. 

What IoT can do for the SCM

  • Provides a simple and secure way of informational exchange between the participants
  • Increases decision-making efficiency 
  • Improves freight control (smart containers with regulated environment conditions) 
  • Significantly reduces risks associated with a human factor due to the minimal amount of interactions 
  • Ensures crosscutting vehicles’ management 
  • Prevents trucks’ breakdowns thanks to the predictive maintenance 
  • Provides big data used for statistical calculations and tendencies identification

And now let’s take a look at a few practical examples of the IoT implementation.

  • Fleet Management. The IoT system takes data from the fleet vehicles and passes it on to the analytical center. The IoT sensors collect information about vehicle characteristics, such as engine conditions, fuel consumption, truck’s location and so on, along with the driver’s behavior on the road. This tracking empowered by the IoT is helpful in multiple regards, including fuel fraud prevention and bad driving detection. In addition, using the data about the vehicle’s particles, specifically, brakes, transmission, and engine, such IoT-based technology as ELD can help determine the driver’s idle time along with the level of his or her aggressiveness on the road.
  • Route Management. When it comes to route management, IoT contribution is represented with truck beacons and GPS systems. As these devices help locate cargo vehicles on the route, delivery time can be calculated and then transmitted to the consignee. Another amazing thing about these IoT devices is that they inform the drivers about the road situation, which is especially handy when there are harsh weather conditions, such as landslides.
  • Healthcare Logistics. Digitalisation has put positive adjustments to all the healthcare sector, but there is one sector where technological advances, IoT in particular, made a truly game-changing impact. Internet of Things’ implementation solves a bunch of logistical holdbacks of the donated blood supply chain. With the help of the barcodes and RFIDs attached to the blood bags, the IoT transmits real-time data to the Blood center and the hospitals simultaneously. As a result, all logistic processes as well as decision making are fully optimized. 

Here is exact list of tasks performed by the IoT empowered technologies for the donated blood supply chain:

  • Blood collection
  • Blood processing 
  • Blood distribution 
  • Blood transportation 
  • Blood inventory operation
  • Blood utilization

IoT and Blockchain integration

Of course, IoT and blockchain were created as separate technologies and we have considered several examples of their independent implementation in the field of logistics. However, as the practice of  logistics software development has shown, the integration of these technologies often comes as a single body. This happens exactly because of the mutually beneficial symbiosis between the IoT and blockchain, where the former enriches the software with data and the latter grants its security. Additionally, IoT embedded systems collect a lot of logistic-related data which requires further processing in control centers. To that end, the data’s coherence via storing and transmission has to be ensured, and the blockchain handles the task just perfectly. Below is a short list of the ways in which logistical companies can benefit when integrating IoT and blockchain:

  • Efficient management of IT devices installed on relevant units (trucks, containers, drones, etc.) 
  • Smart payment system with smart contacts 
  • Transparent goods trackage and contract fulfillment 
  • 100% protection from hacker attacks.

Wrapping Up

Implementation of technological advances as the means of keeping up with demands of the modern day markets is critical for any industry. As for logistics, digitalization is especially crucial in its domain as it acts as a glue for the whole supply chain, bonding all the links together.

Logistical implementations of IoT and blockchain give logistics exactly the boost it is looking for. Transparency of the supply chain processes allows logistic companies to exercise an effective and fully secure control of the goods’ transportation in a real time mode. It is worth mentioning that the price for a logistics software development company service is not cheap due to the complex nature of the task. However, on the long perspective, integration of blockchain and IoT is a proactive approach that proves significant increase of the company’s income thanks to profound optimization of the workflow.