Executive Voices 3 mins read

Blockchain and IoT: The future of supply chain

Blockchain can greatly improve supply chains by enabling delivery of products. Read how Software AG solutions help maintain a totally transparent supply chain.

Bernd Gross Bernd Gross

Imagine a manufacturing company that has factories, assembly plants, warehouses and offices in over 100 locations in 20 countries.

Now imagine that this manufacturer has thousands of suppliers, third party engineering and logistics partners and customer. Supply chain visibility is critical, because each step – from design, manufacture and sales to distribution and tracking repairs – must be approved, stamped and documented. This results in masses of documents in varying forms: PDFs, spreadsheets, paper.

Somehow, all these parties must work together in a trusted environment; if one link fails the entire chain falls apart. Each link must also be totally secure and resilient in the face of unexpected events, as the current pandemic is demonstrating.

What’s the worst that can happen, you ask? Say an order of a critical part for a machine in your factory is delayed or untraceable in the supply chain. The manufacturer eventually tracks down the part in its still-manual warehouses, but realizes its documentation is out of date. The manufacturer cannot use the part for compliance reasons, so its machine remains broken – causing losses to the company.

This is just an example of what can happen when the supply chain of a major manufacturer is broken. The logistics challenges of a manufacturer such as this, and in many other industries, cannot be understated. ERP and IT systems cannot manage all the moving parts of a supply chain.

Blockchain is a possible solution

What if you had visibility of every asset in your supply chain: Its location, its status (Is it approved? Is it delayed?)? And what if you could be 100% sure that the part or product is not counterfeit, that it has not been tampered with? That only your trusted suppliers and partners have touched it along the way?

This way, delays would be managed, security would be guaranteed – your customers would be completely satisfied that they are receiving exactly what they need/ordered and on time with no security issues – in full compliance with standard operating procedure (SOP) or regulations.

This is where blockchain, and other distributed ledger technologies (DLT), come in. DLT is being considered as a possible architecture for solving the problem of supply chain visibility and security.

According to Harvard Business Review: “Blockchain can greatly improve supply chains by enabling faster and more cost-efficient delivery of products, enhancing products’ traceability, improving coordination between partners, and aiding access to financing.”

When you add the Internet of Things (IoT) into the mix, with sensors and other connected devices on everything from parts, finished products and transportation, the entire supply chain can be automated and monitored. Streaming analytics from data in connected, virtual warehouses show you where everything is at any given time, every asset is visible.

Rather than use paper or e-documents, each partner on the chain would use blockchain to create and communicate its participation. Plants, engineering, sales, customers and suppliers would all be integrated into the blockchain network, connected to each other and the manufacturer in a secure way.

This is not fantasy; a platform incorporating IoT, streaming analytics, hybrid integration and blockchain is already a reality. A combination of Software AG’s Cumulocity IoT, webMethods integration and DLT holds the key to maintaining a secure, real-time, trusted and totally transparent supply chain

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