How to Use Blockchain and IoT in Logistics and Succeed?

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Customer satisfaction is vital for all the suppliers of these days’ client-centric world. Companies of all sizes and business domains have to invest more in their activity to be competitive and maximize the value of the rendered services. 

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That is why the need for services digitization is evolving worldwide. Logistics is one of the business fields that need workflow modernization for stable corporate development and viability. Blockchain and Internet of Things (IoT) implementation is a powerful instrument for realizing these purposes. 

This post is prepared for you to consider how IoT and Blockchain help experts in logistics operations and Supply Chain Management (SCM). Moreover, you’ll get actual samples of how the user experience might be enhanced through technology integration.

Supply chain management: what does it consist of?

Blockchain Integration and Its Benefits for Logistics

The growing Blockchain usage in Supply Chain Management (SCM) and logistics activity is a positive trend as it gives security, workflow enhancement, and transparent control. Blockchain also improves confidence between customer and shipper, simplifying the decision-making process. Moreover, every network participant has real-time access to data and can operate it. 

Businesses greatly benefit from Blockchain integration with logistics and SCM procedures. So, this technology is widely used in the following processes:

  • Business flow enhancement (e.g., delivery routes, document flow, etc.)
  • Goods tracking, transportation, and certification 
  • Security improvement (such as fraud reduction) 
  • Payments, smart contracts, etc. 

Let’s look at how Blockchain works in logistics and SCM.

Blockchain in Logistics and SCM

Tracking the Provenance of Goods 

The customers frequently have concerns about the provenance of items and their uniqueness, preferring to buy ethical goods. The suppliers can satisfy these demands using blockchain technology integrated during the logistics software development in their digital product. 

For instance, provenance tracking is essential for expensive goods like designer watches, handbags, or jewelry. Their origin certificates can be tampered with or lost. Blockchain technology resolves this significant issue increasing the quality of item identification and offering an opportunity for transparent provenance tracking. 

The pharmaceutical business is particularly vulnerable to tampering: in addition to causing financial harm, it puts patients’ health and even lives in jeopardy (e.g., cancer medicines). However, Blockchain can provide transparency in the supply chain from the producer to the pharmacy and the individual patient. It is more difficult to perform fraudulent actions with items or sell counterfeit medical preparations using barcodes and auto-ID technology. 

Buyers may also use Blockchain for: 

  • Checking if the seller is the rightful item owner
  • Determining the provenance of the goods
  • Making ethical purchases 

As an example, Everledger utilizes Blockchain to detect gemstones and store data from 40 different sources. It aids in the unique identification of the diamond and tracking its way from one owner to another.

Container Shipping: How to Solve Documentation Problems?

The main issue of container transportation is time-consuming and resource-intensive paperwork processing. Furthermore, the risk of fraud, tampering, or loss of the Bills of Lading (BOL) and other documents remains. 

The price of handling trade-related documentation ranges from 15% to 50% of the material transportation cost. These figures don’t account for the dangers of document forgery, fraud, or human error.  However, there is a way to improve the digitization of document circulation and paper registries. 

Blockchain technologies link large networks and provide reliable interconnections between shipping businesses, ports, and customs authorities. For instance, IBM and Maersk proved the following blockchain goals in their collaborative project:

  • Shadowing all the necessary documents and approvals
  • Getting the most up-to-date information on container status
  • Interface standardization, traditional IT systems supplementation

The effort was successful: by the end of 2017, Maersk had tracked 15% of its container shipments on the Blockchain, which amounted to over 10 million boxes per year.

Food Supply Management 

Foodborne illness is one of the most severe problems in the supply chain. Retailers must determine the food origin, find and remove things that come into touch with hazardous edibles from shops. But searching for the infection source may last for several weeks or even months. It is critical to do that as soon as possible to reestablish consumer satisfaction.

This inconsistency may be resolved with Blockchain, speeding up supply chain tracking. 

Food delivery monitoring with the help of blockchain

Internet of Things: How It Improves Supply Chain and Logistics Operations? 

The Internet of Things and SCM are becoming more synonymous. Because of the technology simplicity for supply chain management, it has become one of the most noticeable developments in logistics. Let’s consider the enhancements IoT brings for the supply chain: 

Simple network interactions. Businesses can use IoT for SCM improvement and control. All the data transferred will be delivered securely. 

Effective monitoring of freight units. Companies can monitor transportation processes, enhance freight costs, improve fleet running, etc. 

Successful avoiding financial damage and vehicle failures. Entrepreneurs can forecast trends related to regular truck breakdowns, get notifications about potential failures, and uncover faults before they become serious by studying vehicle performance.

Automatic delivery process. Environmental sensors in smart containers monitor and control the boxes’ temperature, lighting, and humidity. The system assures the security of “sensitive” products, tracks the position of containers, the opening and closing of doors, and so on. 

Route Management Enhancement

IoT technologies for location and route management are well-known and frequently utilized. GPS tracking systems and truck beacons help with vehicle monitoring along the route, ensuring on-time cargo delivery, and informing clients about the status of their orders. 

Moreover, IoT devices are also often employed in real-time warning systems. They alert dispatchers and drivers about roadblocks (e.g., landslides, fallen trees), as well as accidents, allowing them to respond rapidly to situations. 

Vehicle monitoring and route management components

Minimized Fuel Consumption

IoT-based fuel control implemented in a fleet management system assists in cutting the company’s average fuel expense by at least 10%. Gasoline sensors fitted in a fuel tank can keep track of fuel levels, usage (per period and on average), refill dates and locations, etc. 

They also gather vital information to resolve numerous logistic and fleet management issues when used with the Engine Control Module (ECM), GPS trackers, and analytical software. Below there are the most common examples of the solved fuel consumption problems. 

Reducing excessive fuel usage. With the help of gasoline cards, companies can prevent “invisible” and undiscovered leaks, track internal/external fraud, and identify fuel theft. 

Transparent fuel price management. Employees can utilize bespoke API-based connections between telematic and billing systems to ease accounting, analyze fuel usage for a vehicle/route, optimize expenses, and so on. 

Quick fuel reporting. The technology calculates fuel use and refills, notifies management of any unanticipated losses, gathers data for reporting, and enhances driver behavior analytics.

IoT and Blockchain Implementation

We’ve considered the basic examples of IoT and Blockchain use in logistics. It should also be mentioned that these two technologies can work in cooperation. Data from IoT end devices must be processed and delivered fast, and participants have to continuously maintain data security. Many IoT use cases in the supply chain have demonstrated that Blockchain is a viable answer to such a problem. 

This way, DLT (Distributed Ledger Technology) provides “immutable memory” and enables distributed and secure data storage. After the information has been retained, no one can modify it.

Sensors and other IoT endpoints are now placed at practically every logistics facility, delivering data to control centers, ensuring data consistency for all links in the Internet of Things supply chain. The challenge of processing and transferring large volumes of data is adequately solved by blockchain-based software.

Bottom Line

This post enlightened only the basics of Blockchain and IoT use in logistics. But if you want to have a broader picture, you can apply to an experienced software development company. The specialists will fully consult you about the peculiarities of your Blockchain- or IoT-based logistics project and help you develop a profitable and modern product for your business.

Vitaly Kuprenko is a writer for Cleveroad. It’s a web and mobile app development company with headquarters in Ukraine. He enjoys writing about technology and digital marketing.

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