Keeping and enforcing records and lowering the cost of trust – that critical requirement in so many business transactions – can be immensely powerful in finance and healthcare.
In other sectors, further opportunities are created however when the power of blockchain is combined with other developing technologies. In the case of global supply chains, it is the convergence of blockchain and the Internet of Things (IoT) which has people buzzing (myself included).
Supply chains are all about efficiency. Every stage of the chain adds cost as more and more activities and parties take their share. Inefficiencies in the global supply chain cost UK companies nearly $2bn, according to Zencargo due mostly to the requirement for costly and potentially unnecessary telephone and email communications between parties amounting to a game of ‘telephone’.
IoT is one technology that has the potential to radically impact business and supply chains in particular but IoT also creates another challenge, managing data. Creating and managing trustworthy data however, is one of blockchain’s great strengths.
For the uninitiated, the Internet of Things or ‘IoT’ or the Internet of Everything or ‘IoE’ refers to the interconnection via the internet of everyday objects and devices enabling them to send and receive data. This is facilitated by sensor tech such as RFID (Radio Frequency Identification) which are increasingly in use across the supply chain.
A great example of work in this field is Sensor City, which is a collaboration between the University of Liverpool and Liverpool John Moores University that enables industry and academic partners in a range of sectors to translate their innovative sensor concepts into commercially viable solutions.
The IoT is all around us and the network of interconnected things is growing rapidly. Think of the now ubiquitous FitBits, your Nest home heating system and virtual assistants like Amazon Alexa, your dishwasher, cooker, washing machine, alarm, doorbell, the list continues…
IoT uses smart contracts (contracts written in code) which are automatic once the right conditions are met. Smart key cards are a simple example of this tech that has been in use for years, in fact, smart contracts were invented some 20 years ago.
When we imagine the countless numbers of sensors we will one day have then ‘doors’, in the form of transactions in the supply chain, like payments and delivery notifications can be unlocked automatically by smart contracts with minimal human input.
The amount of data that will be generated is astounding but the obvious question as with all large data volumes is, how can we manage it and critically, trust its veracity?
The convergence of blockchain and IoT technology paints an exciting picture of a world where goods can travel through supply chains with limited or no human created friction, no manual inventory processes and few mistakes, meaning huge efficiency gains at every level.
And, all the time each data point being immutably stored on a blockchain, allowing each block of information to be verified and agreed rather than manually accounted for.
There are other benefits too besides cost savings. Consumers can benefit from increased visibility of their deliveries with quicker and more efficient updates on status.
There are huge implications for provenance allowing supermarkets and customers to know exactly which farm bred their meat for instance (technology already in use by Dutch supermarket Albert Heijn tracking orange juice, admittedly more for the purpose of marketing) or to verify the authenticity of goods (checkout blockchain start-up Block Verify) with positive implications for instance in the battle against conflict diamonds.
It’s no wonder then that the market for global supply chain management is expected to grow from $13 billion to over $19 billion by 2021 powered by technology like IoT, smart contracts, machine learning and blockchain (Gartner).
The larger prize however is surely for those companies with the massive global supply chains to manage, from Amazon to Maersk, the potential savings are significant. A big deal if you have Amazon shares I suppose. What is also exciting however is the potential cost reduction for the rest of us.
There is an opportunity in future for SMEs to completely rethink the cost of global export, creating opportunities to grow globally that might previously have been a pipe dream. More competition can only be a good thing for consumers and we may in future see yet another democratising effect of technology in business.