Increasing Supply Chain Visibility Through the Use of IoT Sensors and Blockchain

I think it’s fair to say that the Supply Chain industry has been rather slow in terms of technology adoption, relying heavily on manual processes and paper-based systems.

However, with the advent of Internet of Things (IoT) sensors and blockchain technology, there is now an opportunity to transform the Supply Chain industry by digitizing the entire process.

And before we get stuck into it, please keep in mind that while Supply Chain digitization is about replacing manual processes with digital solutions to optimize the Supply Chain.

Supply Chain digitalization is more focused on using technology to improve and automate business processes.

IoT (Internet of Things) in the Supply Chain involves the use of interconnected devices to gather and transmit data on physical objects, such as transported goods and Supply Chain assets.

This real-time data exchange enables companies to optimize decision-making, enhance freight transportation control, and improve overall Supply Chain management.

IoT facilitates end-to-end tracking, reduces waiting times, and allows for dynamic deviation responses, ultimately leading to a more efficient and transparent Supply Chain.

Blockchain technology in the Supply Chain enables the secure and transparent recording and verification of transactions and data across the entire end-to-end Supply Chain.

It provides a decentralized and immutable ledger, ensuring data integrity and trust among multiple stakeholders involved in the end-to-end Supply Chain network.

By combining blockchain with IoT, data can be securely shared across all parties, fostering a faster, more effective, and efficient Supply Chain. This integration also offers opportunities to improve product quality, increase customer loyalty, and address challenges related to security, compliance, and data sharing.

Visibility: With IoT sensors and blockchain, companies have real-time visibility into their Supply Chain operations. They can track their products from production to delivery, monitoring every step of the way. This increased visibility enables them to identify bottlenecks, reduce delays, and improve overall efficiency.

Traceability: One of the biggest challenges facing Supply Chain managers is the ability to track and trace products throughout the Supply Chain. IoT sensors and blockchain solve this problem by providing end-to-end traceability. Companies are able to track their products from farm to table, mine to finished goods, and everywhere in between.

Security: Counterfeiting and fraud are significant concerns in the Supply Chain industry. Blockchain technology solves this problem by providing a secure and tamper-proof record of transactions. Companies can ensure that their products are authentic and have not been tampered with during transportation.

Efficiency: IoT sensors and blockchain technology can help companies streamline their Supply Chain operations and eliminate unnecessary steps. For instance, by using smart contracts, companies can automate payment and insurance claims, reducing administrative tasks while improving cash flow.

Sustainability: Digitizing the Supply Chain can help companies reduce their carbon footprint. By optimizing logistics operations, companies can reduce fuel consumption, lower emissions, and minimize waste.

IoT sensors refer to internet-connected sensors that can monitor conditions, location, movement, and more of physical objects. In the Supply Chain context, IoT sensors can be attached to or embedded into products, pallets, containers, trucks, etc.

Tracking and Monitoring

o??? GPS trackers on trucks or shipping containers to monitor real-time location and route adherence

o??? Temperature, humidity, and vibration sensors to track environmental conditions

o??? RFID tags on individual products providing location visibility throughout the Supply Chain journey

Automated Logging

o??? Barcode/RFID scanning automatically capturing inventory as it moves between sites

o??? IoT devices scanning and uploading data to the cloud can be done automatically rather than manual data entry

Sensor Analytics

o??? Using sensor data analysis to identify optimization opportunities Supply Chain improve efficiency and prevent bottlenecks or eliminate weaknesses

As we know blockchain is simply a decentralized digital ledger that provides a verifiable record of transactions.

Enhanced Traceability

o??? Tracking movement of inventory through each step of manufacturing, transportation, and storage

o??? If an issue arises (e.g. contamination), blockchain supports rapid and accurate tracing to find the source

Greater Transparency

o??? All Supply Chain parties can access transaction history on the blockchain providing end-to-end visibility

o??? Supports accountability, proper version control, fast auditing, and interrogation

Increased Trust

o??? Blockchains are decentralized making data difficult to tamper with and fraudulent transactions easier to detect

o??? Ensures accurate, fast, and timely data exchange between parties and key stakeholders

Smart Contract Enablement

o??? Business terms, tracking data, and IoT metrics can trigger automated smart contract executions (e.g. payments)

Walmart has implemented a blockchain-based Supply Chain management system to track its produce, including lettuce and spinach. The system uses IoT sensors to monitor the temperature and humidity levels of the produce during transportation, ensuring that they remain within the required range. Benefits realized include improved food safety, reduced waste, and increased transparency.

Maersk has partnered with IBM to develop a blockchain-based platform for supply chain management. The platform, called TradeLens, uses IoT sensors to track containers and vessels in real-time, enabling better inventory management and reducing the risk of cargo damage.

Benefits realized include increased efficiency, reduced costs, and improved customer satisfaction.

Nestle has implemented a blockchain-based system to track its coffee beans. The system uses IoT sensors to monitor the temperature and humidity levels of the beans during storage and transportation, ensuring that they remain within the required range.

Benefits realized include improved quality control, reduced waste, and increased transparency.

De Beers has developed a blockchain-based platform for tracking diamonds throughout the Supply Chain. The platform, called Tracr, uses IoT sensors to monitor the diamonds' location, temperature, and humidity levels.

Benefits realized include improved provenance tracking, reduced risk of counterfeiting, and increased consumer confidence.

Volkswagen has implemented a blockchain-based system for tracking the origins of its raw materials. The system uses IoT sensors to monitor the movement of raw materials, such as cobalt, throughout the Supply Chain.

Benefits realized include improved supply chain transparency, reduced risk of conflict minerals, and enhanced brand reputation.

Rio Tinto has implemented a blockchain-based system for tracking its iron ore. The system uses IoT sensors to monitor the ore's quality, quantity, and location throughout the Supply Chain.

Benefits realized include improved inventory management, reduced fraud, and increased efficiency.

Kuehne + Nagel has implemented a blockchain-based platform for Supply Chain management. The platform, called Sea Explorer, uses IoT sensors to track containers in real-time, enabling better inventory management and reduced risk of cargo damage.

Benefits realized include increased efficiency, reduced costs, and improved customer satisfaction.

Bumble Bee Foods, a US-based seafood company, has implemented a blockchain-based system for tracking its tuna. The system uses IoT sensors to monitor the fish's location, temperature, and humidity levels throughout the Supply Chain.

Benefits realized include improved traceability, reduced risk of contamination, and increased customer trust.

Dole Food Company, a US-based fruit and vegetable producer, has implemented a blockchain-based system for tracking its produce. The system uses IoT sensors to monitor the producer's temperature, humidity, and location throughout the Supply Chain.

Benefits realized include improved food safety, reduced waste, and increased transparency.

Golden State Foods, a US-based food distributor, has implemented a blockchain-based system for tracking its meat products. The system uses IoT sensors to monitor the meat's temperature, humidity, and location throughout the Supply Chain.

Benefits realized include improved food safety, reduced waste, and increased transparency.

Integration Complexity: Integrating IoT devices and blockchain technology into an existing Supply Chain infrastructure can be complex and time-consuming. It requires coordination between different teams, including IT, engineering, and Supply Chain management.

Data Management: IoT devices generate vast amounts of data, which can be difficult to manage and analyze. Ensuring that this data is accurately captured, processed, and integrated into the blockchain requires robust data management systems and protocols.

Scalability: As the number of IoT devices and blockchain nodes increases, the system must scale to accommodate the growth. This can be achieved by using cloud-based services, but it also introduces additional complexity and cost.

Security: Both IoT devices and blockchain networks require strong security measures to prevent unauthorized access and data breaches. Ensuring the integrity of the data and the security of the network is crucial, especially in industries that handle sensitive information.

Interoperability: Different IoT devices and blockchain platforms may use different communication protocols and data formats, making it challenging to integrate them seamlessly. Standardization efforts, such as the use of APIs and SDKs, can help address this issue.

Regulatory Compliance: Depending on the industry and geographic region, there may be regulatory requirements that need to be met when implementing IoT and blockchain technology. Understanding and complying with these regulations can be a challenge.

Cost: Implementing IoT and blockchain technology can be expensive, especially if the organization needs to invest in new hardware, software, and personnel. The cost of maintaining and upgrading the system over time must be carefully considered.

Lack of Skills and Expertise: Implementing IoT and blockchain technology requires specialized skills and knowledge. Organizations may need to hire and train staff members to work with these technologies, which can be a challenge, especially in regions with limited talent pools.

Change Management: Introducing new technologies into an established supply chain can disrupt traditional practices and require significant changes to business processes. Managing this change and ensuring buy-in from all stakeholders is essential for successful implementation.

Data Privacy and Ownership: With the increased amount of data generated by IoT devices, questions arise about data privacy and ownership. Organizations must establish clear policies regarding who owns the data, how it is used, and how it is protected.

Environmental Impact: The increased use of IoT devices and blockchain technology can have a positive impact on sustainability by reducing waste and improving efficiency. However, the energy consumption associated with these technologies must be carefully managed to minimize any negative environmental effects.

Supplier Selection: Choosing the right suppliers for IoT devices and blockchain solutions can be challenging due to the rapidly evolving landscape of these technologies. Thorough research and evaluation are necessary to select the best partners for the organization's specific needs.

System Maintenance and Upgrades: IoT devices and blockchain networks require regular maintenance and upgrades to ensure optimal performance and security. Scheduling downtime for maintenance can be challenging, especially in high-volume supply chains.

Network Effects: The success of an IoT and blockchain solution often depends on the strength of the network effect. If the network is not well-designed or properly maintained, it can lead to issues with scalability, interoperability, and security.

Governance: Establishing clear governance structures and decision-making processes is critical for the successful implementation of IoT and blockchain technology. This includes defining roles and responsibilities, setting standards, and resolving disputes.

Implementing IoT sensors and blockchain solutions is becoming increasingly viable for small to medium enterprises (SMEs) in the Supply Chain domain.

Maturing Technology: Supply chain-focused IoT devices, blockchain platforms, and managed services are growing more affordable, and pre-configured for quick implementation by SMEs with limited technical skills.

Scalable Deployment: Cloud infrastructure and platform-as-a-service models allow distributed ledger networks and IoT data ingestion/analytics tools to be tested and scaled cost-effectively.

Leverage open-source software: There are many open-source IoT and blockchain platforms available, which can save SMEs money on software development costs.

Partner with service providers: SMEs can partner with service providers that offer IoT and blockchain solutions as a service. This approach allows SMEs to leverage the expertise and resources of larger companies without having to invest in the technology themselves.

Seek government grants and funding: Many governments offer grants and funding programs specifically designed to support SMEs in adopting advanced technologies like IoT and blockchain. SMEs can explore these opportunities to offset the costs of implementation.

Collaborate with universities and research institutions: SMEs can collaborate with universities and research institutions that have expertise in IoT and blockchain technology. These collaborations can provide access to cutting-edge knowledge and resources at a lower cost than hiring a team of experts.

Use cloud-based services: Cloud-based services can provide SMEs with access to powerful computing resources and software applications without the need for expensive hardware or software installations. This approach can help reduce the upfront costs associated with IoT and blockchain implementation.

Consortium Blockchains: SMEs can leverage consortium blockchains in their industry for cost and expertise sharing with a network of trusted partners versus building entirely own blockchains.

Pilot Focus: Implementation can start small with minimal viable pilots focused on 1-2 high-impact use cases – e.g. analytics for bottleneck identification. This allows proving value before a decision is made to make larger investments.

Emerging Business Models: Innovative business models like IoT sensor data monetization, and blockchain-based supply chain finance help establish revenue streams to offset costs.

When evaluating IoT and blockchain solutions, SMEs should focus on the return on investment (ROI) rather than the total cost. They should look for solutions that provide tangible benefits, such as increased efficiency, reduced costs, or improved customer experience, and calculate the ROI based on those benefits.

While some hurdles persist, maturing technologies, regulated costs, and creative operating models are bringing the combined potential of IoT and blockchain within commercially feasible reach for some SMEs.

The implementation of the Internet of Things (IoT) and blockchain technology in supply chains is becoming increasingly important for improving supply chain visibility and resilience. IoT devices, such as sensors and RFID tags, provide real-time data on supply chain events, allowing for greater monitoring and tracking of goods throughout the supply chain. This increased visibility enables businesses to identify potential weaknesses and bottlenecks in their Supply Chain, allowing them to make informed decisions to optimize their operations and improve overall efficiency.

Blockchain technology, on the other hand, provides a secure and transparent way to store and share data related to Supply Chain events. By using blockchain, businesses can create an immutable record of transactions and events, reducing the risk of fraud and errors. Additionally, blockchain enables the creation of smart contracts, which can automatically execute when certain conditions are met, further streamlining Supply Chain processes.

The combination of IoT and blockchain technology can revolutionize Supply Chain and Supply Chain management by providing unprecedented visibility and resilience. With real-time data and immutable records, businesses can quickly identify and respond to Supply Chain disruptions, reducing the impact of unexpected events. The increased transparency provided by blockchain technology can help build trust among suppliers, manufacturers, and customers, fostering very high levels of collaboration and cooperation.

Ultimately, the integration of IoT and blockchain technology into an organization’s Supply Chain makes it more resilient, agile, flexible, and visible while ensuring the organization stays relevant and competitive.

The real question is, can organizations afford NOT to do it sooner or later?

[And, if you need a remote Supply Chain specialist, Subject Matter Expert, Advisor, Consultant, Project Manager or know someone that does, please feel free to connect & message me directly on LinkedIn.]