Two of the most hyped technologies that supply chain professionals constantly hear about are the “Internet of Things” (IoT) and blockchain. It is becoming increasingly clear that they are destined to be together. But is this a marriage of marketing convenience, or is there a real bond here? I think there are a few reasons why the pairing makes sense.
Reason 1: Data Security
One of the top concerns about IoT is that securely capturing and storing data from a vast network of sensors and devices might pose a significant challenge. Locally stored IoT data might be hacked into by some unscrupulous individual putting the validity of the data at risk. In contrast, data stored on a blockchain is cryptographically secured, and resides on a vast distributed network of computers that is outside the enterprise’s network.
Reason 2: Data Interoperability
Blockchain can help solve the interoperability challenges of IoT devices. IoT is still relatively new, and as a consequence it is awash with a multitude of protocols and data formats. As yet, there are no unifying standards. Blockchain can serve as a uniform way for IoT devices to securely share data across a network of stakeholders.
Reason 3: Faster Settlement
IoT can leverage the attributes of blockchain for increased automation. Snippets of computer code, referred to as “smart contracts” stored in the blockchain can execute business logic automatically. This allows IoT devices to communicate with each other and it could even drive the processing of payments without the need for human intervention based on the terms contained in the smart contract. For example, if the quantity on the order is shipped, received and passes inspection, the payment can be released automatically. There is simply no need to wait for an invoice to be generated and processed, which can currently take days or weeks.
Reason 4: Single Source of Truth
One of blockchain’s greatest advantages is that it provides a tamper-proof ledger of transactions and events. When supply chain partners embrace blockchain technology they are agreeing to use a single, immutable source of the truth. All partners can be confident in the integrity of their transactions and their data.
Putting it all Together
One specific example of the use of IoT and blockchain is the collection of environmental data of products in transit, including temperature, humidity, time, date and location. IoT devices can be placed at all points in the movement of produce from its source to its eventual receipt at a store, restaurant or other outlet. This data can be collected and stored in a blockchain, providing an immutable record of a specific block of product.
In the event of a dispute or claim related to the quality of the produce, a complete and reliable history of the product can be available for scrutiny. This information may be supplemented by photographs, taken at various shipping and receiving points, which could also be stored in the blockchain, providing a complete picture of the history of the product. Depending on the placement of the IoT devices the history, provenance and traceability of product, could be even more complete, down to specific packages.
There are new use cases and opportunities emerging almost daily as new technological capabilities are identified with IoT, blockchain and other new technologies. This is one of the most exciting new areas for the food industry, and it is great to be here at Procurant helping our customers with the many ways IoT and blockchain can come together to increase visibility, trust and control across their supply chains.