Will, the integration of Blockchain Technology and IoT in supply-chain management, create more powerful optimization?
We estimate that the application of Blockchain to global supply-chain alone could result in more than $100 billion in efficiencies. Add improvements in provenance and traceability of pharmaceuticals and food.Ginni Rometty, CEO of IBM
Today’s world of supply chains is operating under the ever-changing environment, and hence they are vulnerable to a variety of risks. Supply chain management has been in existence and has developed over the past hundred years. Over the years, conventional supply chain management, have relied on the manual and laborious ways of gathering information. Organizations are challenged with discovering ways to meet ever-rising customer expectations at manageable costs.
The five factors that influence supply-chain operations:
The global Blockchain supply chain market was valued at $ 85.7 million in 2018 and projected to grow at a CAGR of 80.4% to reach $ 2674.9 million by 2024, on account of increasing demand for transparency of the supply chain.
Owing to globalization and the rise in internet penetration, enterprises and customers do not have clear visibility of all the members present in management.
Supply-chain Key Challenges:
- Multiple separate players
- Lack of transparency
- Discrepancies in records
- Limited cross-process visibility
- Maintaining high performance
- Difficult to identify the source of the product
The global value of counterfeit goods is estimated at $1.2 trillion. A report commissioned by the International Trademark Association(INTA) and the International Chamber of Commerce, states that the global economic value of counterfeiting and piracy could reach $2.3 trillion by 2022.
Some of the industries majorly affected are:-
In Pharma & Medical Devices supply chain:
- 1 million people die every year from counterfeit drugs. (Source: WHO)
- 25% of vaccines reach their destination in a degraded condition due to incorrect shipping. (Source: AJOT)
In Logistics management:
- 20 million shipping containers exist worldwide, making approximately 200 million trips a year (Source: BillieBox)
- Over 10,000 containers lost at sea every year. (Source: World Economic Forum)
In Food supply chain & Agriculture operations:
- More than 1.5 million people in India die every year due to food-borne diseases. (Source: NCDC, Govt. of India)
- According to PWC study, $40 billion in food fraud globally.
In Manufacturing operations:
- it is estimated $b 12~45 billion globally in loss to counterfeit auto parts (Source: Automotive Logistics, Global Banking).
- By 2022, the total value of counterfeit goods in the world will be approximately USD $1.9 trillion to 2.8 trillion.(Source: Frontier Economics, NPR, Automotive-logistics, Global Banking)
Blockchain disruption in supply chain management can solve the problem of lack of transparency and accountability.
Blockchain is a technology utilized as the ideal place to store value, identities, agreements, property rights, credentials, etc. As every transaction in the network is recorded in a digital ledger, and multiple transactions forming a block. For instance, any data stored in the Blockchain cannot be edited or deleted. Blockchain is a compelling database which relies on four main principles:
- Distributed and decentralized database,
- Peer-to-Peer transactions,
- Transparency of Operations and Security.
Moreover, this technology enables partners and stakeholders within the logistics and supply chain to track bottlenecks and detect whether the stocks are in one place or at the wrong location, which is especially crucial for perishable commodities.
There are many advantages by using technology such as reducing waste and labor costs, presenting the possibilities of tracking and tracing stocks by decreasing events of security attacks, and offering correct and accurate information about potential suppliers and customers’ liquidity as well as current financial positions.
Every entity in the supply chain is connected via a smart contract where the individual/organization defines their rules, regulations, and conditions, authorized by every authority and shows that they agree to each other for specific objectives. When the raw material is supplied to the manufacturer, it stores the product information on to Blockchain using QR Code. And the product is distributed to distributors who perform packaging to product. Then they deliver it to wholesalers, who then sell the products to retailers, where the end-users can purchase the product and scan the product QR code to trace it back to the source.
The above sketch display is a private supply-chain ecosystem where the user can be any member of an organization or any individual user (end-user) who is connected to the product life-cycle. Every product has a QR code, used to identify the product and get access to information on any stage of the product at any step in the process.
The organizations, including registrars, waste management, consumers, retailers, producers, manufacturers, distributors, banks, and ISO standards organizations, are connected by implementing the Private Consortium Blockchain, and each entity act as a node to verify and validate by adding blocks to Public/Private Blockchain.
Internet of Things (IoT)
“Internet of Things is an ecosystem that enables to interconnect between physical and virtual things based on existing and evolving interoperable data and communication technologies. It contains an embedded technology to cooperate with their internal or the external environment.”
This new technology is highly recognized in logistics operations for presenting agility, transparency, and adaptability. Besides, the IoT technology enables to create a smart location management system, Inventory management, and warehousing.
Applications of IoT:
- Asset Monitoring
- Production Monitoring
- Fleet Monitoring
- Connected Assets
- Services Monitoring for Connected Assets
Benefits of Decentralizing Supply-chain Management:
- Transparent Ledger System
- Tracking in Real-time
- Faster Transactions
- Trust-less Chain
- Product Certification
- Greater Security
- Lower Carbon Footprint
- Reduced Cost
Steps to Build a Blockchain-based Supply-Chain ecosystem:-
Identifying the potential and complexity of Blockchain and IoT technology, we at QuillHash have developed a product that ensures all the required parameters for an Individual & organization.
QuillTrace, enables every user to track and trace their assets without prior Technical knowledge in Blockchain technology, and it can be integrated into existing ERP solutions without any additional costs.
Get to know more about QuillTrace in the shared link below:
Feel free to request a Demo for a better understanding of QuillTrace and how it could benefit from your existing system.
Nice article 👌👌 May be ethereum 2.0 will solve the blockchain trilemma condition. It will be a game changer.