By Michael Rivera, PhD
Several internal and external factors contribute to the risk in global supply chains. Some of these are major trends, like globalization and global connectivity, making global supply chains more complex. Others are rooted in the continuous pursuit of efficiency and focus on cutting operational costs.
Companies often don’t have a comprehensive overview of their supply chain networks internally and externally, exposing them to risks such as code of conduct violations and fraud. This makes it essential to build effective supply chain risk management systems that monitor and predict risk for the best proactive response.
Since the major challenges supply chains face relate to security, compliance, and sharing, blockchain technology and the Internet of Things (IoT) offer opportunities to tackle these problems.
Here are the ways IoT and blockchain will help in supply chain management:
Several companies in different industries can use IoT sensors to track and monitor products in real-time and verify that they are in the right locations and conditions.
Combining blockchain and IoT allows data to be safely shared across all sides of the supply chain. This ultimately fosters a faster and more effective system. In addition, it can help businesses improve product quality, increasing customer loyalty.
Eliminating Disputes Through Secure Smart Contracts
IoT and blockchain can ensure safer transportation of products regardless of distance. This system provides a digital arrangement between all parties involved in a trade. Since the terms of these smart contracts are written in computer codes, frictionless financial transactions can occur between unknown parties without dispute.
Fraud Detection and Code of Conduct Violation
It is becoming increasingly crucial to have effective fraud detection procedures supported by the right technologies to reduce business and reputation risks. Thanks to cutting-edge blockchain technology, companies can now record every event or transaction across a supply chain on a distributed ledger. This ledger keeps track of events, transactions, and smart contracts in a safe, irrevocable, and immutable way.
Reducing Paperwork in Supply Chain
Another instance where blockchain and IoT technology can be useful is in the reduction of paperwork. Many businesses still rely on products passing through several intermediaries before they reach their final destination. This conventional way of business makes paperwork necessary. By eliminating paperwork throughout the ecosystem, blockchain and IoT enable businesses to save labor costs and guarantee data security.
Ability to Survive Disruption With Digital Twins
IoT enables connection and access to intelligence in the real world and is interconnected with digital twins, which are virtual replicas of their physical counterparts. In supply chain management, digital twins can analyze risks, demand, inventory levels, and supplier and sales data. This can provide clarity on the best decision to take under different circumstances.
IoT and blockchain technology have the potential to improve supply chain management significantly. Our team of PhDs, data scientists, technologists, business strategists, and artists at Thinaer are helping the world’s leading companies in different industries take control of their supply chain management. Contact us today!