Technologies have an immersive impact on modern businesses. For example, various industries are implementing the Internet of Things (IoT) and blockchain to boost efficiency and increase profits. And logistics is no exception. As a result, these technologies are some of the most frequently implemented in Supply Chain Management (SCM).
This article reveals all the details about the impact of these advanced technologies on the supply chain’s digitalization and the usefulness of their implementation.
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How Blockchain Enhances SCM
Logistics businesses’ spending on blockchain implementation has tripled over the past five years. This is not surprising since it provides multiple possibilities to improve performance, security, and other benefits:
- Increased security. Blockchain protects data from fraud and ensures that all transactions are entirely transparent.
- Secure payments. Smart contracts and blockchain make financial relationships in logistics more reliable.
- Optimization of the company’s processes. Blockchain improves staff efficiency and automates some operations.
- Customer and partner trust. Because blockchain provides full transparency and security, the company becomes more reliable.
Let’s dive into the mechanisms of blockchain’s impact on logistics and SCM and explore some examples of how it can enhance industry processes in more detail.
Streamlining the Documentation Processes
Paperwork is considered one of the most time-consuming procedures in logistics, and it is also extensively exposed to risks such as human errors and document loss. However, the usage of blockchain is a wonderful solution to this issue.
The technology enables secure communication between all supply chain participants, complementing their legacy software. All data can be uploaded to this network, so any team member can access it when needed. In addition, blockchain will protect them from loss or theft.
Tracking of Goods’ Source
Laws in most countries today require logistics companies to have proof of origin and complete information about the origin of goods. For example, pharmaceutical companies, which are responsible for their customers’ health and lives, are obliged to ensure reliability and safety for customers. It is also crucial for precious goods such as jewelry to have proof of origin, to prove that the items were not tampered with or stolen.
SCM uses serial numbers, certificates, and barcodes to confirm the origin and originality. But if they implement blockchain, these transactions will be more manageable and reliable. For instance, to verify the provenance of an item, you can check a record on the blockchain that cannot be deleted or modified, guaranteeing its authenticity.
These are not all examples of blockchain’s positive impact on supply chain management. However, interest in this technology is growing, so there are more ideas for its use in logistics aimed at allowing flawless performance.
Enhancing Logistics and SCM With IoT
The Internet of Things (IoT) plays a considerable role in supply chain digital transformation. By its essence, the IoT system is a combination of various sensors with specialized software. It enables logistic companies to:
- Simplify interactions between supply chain participants
- Reduce human participation in deliveries
- Monitor the storage and shipping conditions of goods
- Monitor transport conditions and avoid accidents and breakdowns
- Structuring and analysis of large volumes of data, etc.
Let’s explore a few examples of how IoT allows us to simplify and solve problems in SCM.
Better Fleet Management
The Internet of Things helps to enhance fleet organization, individual truck efficiency, and driver satisfaction. Thanks to various sensors, the system can measure and analyze such criteria:
- Engine condition
- The situation on the road
- Technical condition of the truck
- Truck location on the road
- Journey time
- Route analysis, etc.
With all this information, a logistics company can significantly enhance the safety of employees and goods. Also, tracking each truck’s performance will allow for completing the necessary repairs in time to avoid critical breakdowns.
Route Optimization
An equally widespread method to use IoT in logistics is to optimize delivery routes. GPS systems are mainly used for this purpose. They allow companies to track the location of each truck, suggesting the best way from its location to the endpoint.
Also, IoT systems often utilize real-time warning systems. For example, they record road situations and warn drivers to reroute in case of unforeseen circumstances, such as traffic jams, road repairs, or severe weather conditions.
Reduced Fuel Costs
Implementing IoT allows companies to waste up to 10% less fuel. By monitoring the situation on the road and choosing the best routes, avoiding traffic jams and long paths, deliveries are more efficient. Optimizing routes not only enables delivering goods faster but also spending less fuel.
Besides, IoT has many other applications. For example, the technology can track storage and shipping conditions, make locating goods in the warehouse more manageable, geolocate each van, and much more. The Internet of Things makes it possible to greatly simplify the work of personnel, making it more efficient.
IoT and Blockchain Combination
Both IoT and blockchain are great technologies for supply chain management digitalization. However, many corporations combine them in their software to get the most out of them.
The combination of blockchain and IoT is genuinely the most effective solution. For instance, the Internet of Things can efficiently assemble and analyze large amounts of data and transmit it over long distances. In addition, blockchain helps make the exchange of files reliable and trustworthy.
Combined software allows logistics companies to perform several tasks at once:
- Link IoT sensors together and manage them efficiently
- Securely pay fees and obligations by employing smart contracts
- Maximize supply chain transparency through the interoperability of IoT sensors and blockchain security
- Minimize the risks of loss or interception of data collected by IoT sensors
Wrapping Up
As you can see, both the Internet of Things and blockchain can significantly improve your logistics and supply chain management. You can incorporate any of these technologies into your operations or combine them for better results. If you need help determining which approach will best meet your goals, talk to an experienced software provider who can guide you and help you integrate the right technology. Take full advantage of modern technology to help your business thrive and stay ahead of the competition.
