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Blockchain and Internet of Things (IoT) – A winning combination for Supply Chain Efficiencies

Giant corporations around the world are building complex B2B supply chains on the foundations of internet-based technologies. Over time, the increasing complexity of global supply chains via fragmented information has proved to be expensive.

Multinational companies have for long tried to reduce their dependence on manual reconciliations cutting across several stakeholders - contract manufacturers, distributors & dealers, third-party logistics firms, retailers, and many more.

Along came blockchain as a panacea to next-generation supply chain management. With increased efficiency, diminished errors, and reduced costs, Distributed Ledger Technology or Blockchain along with IoT possesses the capability to address the most dynamic and complex challenges that global supply chains face.

Why Do We Need It?

For putting a Master Ledger in place, in simple words. A 2017 Harvard Business Review article found the scattered units of information to be a prime issue that plagues modern-day supply chains. The need for blockchain technology grows stronger in the light of the need to reconcile the pools of transaction data & records that companies maintain but are unable to keep error-free.

A digital product trail helps streamline the supply chain process and automate functions – the costs and errors both go down while enhancing business decision-making. Hence the practice has been put in effect by many corporations already.

Challenges in Place presently:

1. Critical business processes tend to rely on a range of data available in private records held by multiple suppliers – from warranty claims for products to manufacturing dates, from shipping details to repair history. Presently, this information is not held in one place. Multiple systems of records and product monitoring done in silo give rise to distrust.

2. Gaps in the conventional cold chain happen due to multiple databases, individual organizational capacity, delay in propagating data, the opportunity for deceit, human errors, etc. This leads to disputes between parties and a lack of customer trust.

3. Immense paperwork and intermediaries are involved in the conventional supply chain management system. High labor costs result from the extensive paperwork.

How it works Blockchain

Blockchain platforms are helping companies create de-centralized product data repositories that hold transactional data and can be linked to form an integrated digital view of a product's entire lifecycle – a Digital Thread.

Massive infrastructures cease to be obligatory in running supply chain management as blockchain allows for peer-to-peer communication. Moreover, the system is designed to not crash if one node fails.

Blockchain holds huge promises for industries like shipping – critical to the supply chain sector. Maersk and IBM created a blockchain-based proof of shipment that showed reduced administrative costs by as much as 15% of the value of shipped goods.


IoT is one of the many new-age, trusted, peer-to-peer business networks. What you get is a tamper-proof distributed ledger that ensures adherence to service levels from the pick-up point to final delivery.

IoT helps capture data from connected devices like sensors, RFID tags, etc., thus ensuring real-time information is accessible to all at the click of a button – be it location and speed of transport or storage conditions. Information gathered continuously gets summarized before getting sent to all parties over the blockchain. Public witnesses ensure minimal cybercrime and fraud.

The inventory and supply chain management sector are to see a 20.2% increase in spending on IoT devices by 2023, as per a Forrester report.

IoT & Blockchain: The revolution of Supply Chain Management

IoT and Blockchain can together provide the supply chain universe with major benefits that the manufacturers, suppliers, or logistics providers can make use of. Some of the key values are illuminated here.

1. Visibility; End-to-End Real-time Access

Challenge: The very many numbers of parties involved in supply chains coupled with the inability to analyze the data collected by companies leads to complications within the end-to-end visibility across supply chains. How do they gauge the reliability of the data across companies before choosing to respond?

Solution: IoT devices, via sensors, can track the status of goods while in transit and share the information with a blockchain-based framework. This ensures real-time access of data to all participants involved.

Use Case

A US manufacturer raises a purchase order on a supplier in Taiwan and tasks a logistics service provider in Hong Kong for pick-up and delivery upon completion. A production monitoring IoT platform lets the supplier track the production status on a secure blockchain, accessible to all three parties.

The logistics guy starts arranging for containers when products near completion and can provide the manufacturer with the container’s movement status based on embedded IoT devices in those containers. Thus, a combination of IoT-based statuses published onto a secure distributed blockchain helps the manufacturer, supplier, logistics provider, customs agent, etc., to be able to track product status and execute transshipment & trans-border transactions.

Companies can respond to unexpected supply chain events such as weather disruptions leading to shipment delays through third-party data sources like weather data streams. It's a whole new world of possibility that every company must explore.

2. Financing: Global Engagement through Smart Contracts

Challenge: Cross-border transactions bring with them never-ending paperwork and bureaucratic red tape – more delays in international payments due to local banking regulations.

Solution: Cargo shipping across borders is made safe and secure thanks to Blockchain and IoT which together come to act as an online arrangement between parties involved. Terms and conditions written in computer code facilitate financial transactions without disputes arising as the distributed register cannot be manipulated. These are the “Smart Contracts” that help avoid discrepancies.

Use Case

Manufacturers and retailers can enter agreements – the payment terms being defined in code and conditional to final delivery. The banks of both parties can have access to the contract, and no legal tussle would follow.

3. Reliability: Regulated & Reliable

Challenge: The highly regulated industries of food and pharmaceuticals require goods to be transported only under controlled temperature ranges and specific time windows. Such regulations are strictly adhered to and failure to provide evidence for the same - results in either delay of high-value shipments or goods getting impounded pending investigation.

Solution: Temperature feeds from sensors onboard are transmitted to an IoT platform. This, complemented with a blockchain framework helps guarantee reliability and security of received data. Comparing temperature feeds during the journey with defined conditions lets suppliers demonstrate contract compliance.

Use Case

a. Regulation Compliance – For the Pharmaceutical Industry

Pharma industries can build a tamper-proof chain of custody. This helps combat issues such as degraded vaccines due to incorrect shipping (25% of vaccines; AJOT reports), damage of temperature-sensitive products (20% of such products; AJOT) or scrapped pharmaceuticals (30% from logistics issue; AJOT)

b. Tracing Farm-to-Fork Products – For Perishable Goods

Perishable goods or short shelf-life products can be tracked better by track-and-trace solutions that help establish a detailed provenance record. 48 million people in the US fall ill from foodborne diseases (CDC) each year, yet this is preventable if only enhanced product tracing abilities are employed – a responsibility shared by manufacturers, distributors, and retailers alike.

4. Insights: Data-Driven Supply Chain

Challenge: There is a real value for enterprises waiting to be tapped by modern-day supply chain ecosystems. Business decisions often get affected by the lack of a cohesive system that allows for realigning sourcing and distribution networks.

Solution: Secure data sharing across all stakeholders becomes possible through the latest machine-learning techniques. This way Blockchain and IoT lets partners derive new insights from a holistic dataset – a trend most likely to accelerate into production as technologies mature further.

Use Case

The accumulated data shared from across manufacturers, logistics providers, suppliers, and contractors on a single secured platform could be combined with economic or climate trend data. This is a game-changing tactic that helps each stakeholder visualize their role in an ever-changing environment and helps foster competitiveness.

5. Reverse Logistics: For Warranty & Returns

Challenge: Evaluating a warranty or return claim made by customers involves a time-consuming and strenuous method of reviewing private data across the several stages of the supply chain, as finished products are often composed of sub-assemblies from multiple manufacturers. An inefficient process results, leading to poor customer experience.

Solution: A de-centralized repository to streamline warranty and returns – using Blockchain.

Use Case

Companies are working with product manufacturers to help solve the challenges of product authentication, warranty-claim automation, failed parts disposal, end-of-life replacement, and targeted recalls.

Additional Benefits

Other Additional Benefits to the synthesis of IoT and Blockchain to supplement your industry's existing Supply Chain Management includes:

1. Product Authenticity: Assessing fake from genuine

Intensely useful for luxury brand manufacturers and their retail partners, blockchain helps combat the problem of counterfeits from eating upon the revenue of their high-value products.

2. Lot Lineage: Assessing Genealogy

Tracing quality issues across the variety of complex product structures sold to customers becomes easier with blockchain technology as detailed records of manufacturing inputs become available.

3. Security: Single source of truth

Fraud is easily identified through a comparison of ledger copies from each party.

4. Human Error: Early Detection of Translational Error

Human or application errors are caught early on since all-party consensus is mandatory.

5. Customer-Centric: Enhanced Customer Experience

It provides an opportunity for the manufacturer to connect with customers directly.


By now you are well-versed with the integrity of data that blockchain helps establish. IoT and sensors further strengthen supply-chain capabilities with secure and transparent transactions. Soon would these two be synonymous with digital trust; and high-rising.


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