Supply Chain IoT Needs Blockchain to Fully Mature
In the supply chain industry, the Internet of Things generates data that will benefit from greater centralization and security. Enter blockchain technology.
For supply chain managers, tracking and tracing products is a nagging preoccupation. Manufacturers may ship their products across the globe, but they lack key data about shipment location and status as packages move from sea port to port.
This lack of transparency is a hulking challenge that affects efficiency and good decision making, say supply chain professionals.
“Right now, our biggest problem is visibility,” said Milind Balaji, a senior supply chain manager in the pulp, paper and packaging division at an East Coast-based manufacturer. “We don’t know where things are.” In some cases, bad weather or political events may delay product shipments. Or a container may arrive with excessive moisture, damaging the products inside.
If Balaji had greater insight into production location and the state of products, he could route or store shipments differently, he emphasized.
This lack of visibility is a costly handicap. Maritime transport is essential to the world’s economy because more than 90% of the world’s trade is carried by sea. At the same time, the supply chain is incredibly complex. Today’s global trade environment relies on a chain of interdependencies among myriad participants—between 5 and 25 parties—that have a role in some 30 milestones in an international ocean shipment. Guesswork about container location or estimated time of arrival costs the shipping industry as much as $20 billion annually, according to Boston Consulting Group.
At the Port of Rotterdam, the Internet of Things (IoT) addressed these problems, bringing efficiency and transparency to one of the busiest ports in the world. Rotterdam’s waterways handle more than 140,000 traversing ships carrying some 460 million tons of cargo annually.
Data on ships in dock, cranes in the yard and individual containers can now be analyzed to find out about ship and shipment arrivals and so on. As a result, operators are moving 25%–50% more containers per hour than any other of its competitors in northern Europe.
“The IT department has come out of the basement and onto the main floor,” Rudy Muller, senior manager of IT at MVII terminal, said in an article on IoT in maritime.
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Bringing Efficiency to the Supply Chain with IoT
Today, though Balaji’s team has begun to use trackers on containers to get that critical data on shipment location and state. “Our containers are becoming smart,” he said. “So we can learn not only where it is, what kind of temperature levels or moisture is inside the container. The supply chain is lagging behind other [sectors]. But we’re getting our visibility to the next level.”
Data suggests that the supply chain industry is ready to gain greater visibility into the chain through Internet of Things devices. Among industries spending on IoT technology, the track-and-trace sector is expected to have the largest spending growth—a 24.2% increase —on IoT devices between 2017 and 2023. Inventory and supply chain management will increase spending 20.2% during the same period, according to a Forrester report.
Balaji’s team uses connected sensors in shipping containers to monitor their location. Equally important, shippers can track the state of these containers: temperature, humidity, weight and so forth are easily traceable.
“FedEx can tell you the moment a parcel has been scanned. In our industry we can’t—there’s too many black holes. You have to fix the visibility piece with IoT,” Balaji, said.
It can be costly to use IoT to track shipments. Today, though, real-time tracking of container shipments with IoT is too costly for many companies.
