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Strengthening Supply Chains with Blockchain-Based IoT

Posted November 2, 2022 | Sustainability |
BIOT

As far back as 2015, blockchain was recognized by the Institute for Blockchain Studies as the fifth disruptive computer paradigm innovation, following the Internet, mobile/social networking, personal computers, and mainframes. Today, blockchain-based Internet of Things (BIoT) is garnering enormous interest and research dollars within the computing community.

IoT devices are beneficial for collecting and analyzing data, but to be useful and relevant, that data must be extremely secure and retain its integrity. This is where blockchain comes in. Blockchain can be thought of as providing a decentralized “fabric” for IoT’s web of intelligent objects.

Sensors acquire data like temperature, air pressure, CO2 levels, and smoke. Once a sensor produces a signal, the signal must be processed and transmitted. Blockchain offers a medium for reliably sharing information to the IoT, creating secure, immutable records by providing “trustless” record-keeping (i.e., no need to trust a third party).

BIoT’s ability to provide end-to-end supply chain information in real time supports the circular economy paradigm. It allows businesses and consumers to shift from a linear take-make-dispose model (which relies on large quantities of easily accessible resources) toward an industrial model where effective flows of materials, energy, labor, and detailed information interact with each other in a restorative, regenerative, more sustainable system.

Improved Information Sharing with BIoT

The most important reason to introduce BIoT into a supply chain network is to improve information transparency. BIoT offers significant advantages and opportunities over traditional information-sharing technologies like enterprise resource planning and electronic data interchange.

BIoT provides a platform to connect diverse stake­holders with multiple sources of reliable data, gen­erating a rich information landscape. It can enable information sharing between independent, hetero­geneous firms in a supply chain, letting them lever­age the group’s collective knowledge to improve operational readiness and reduce administrative costs.

Some blockchains are private, allowing only authorized users access to the database, whether for reading or writing. These are sometimes called “permissioned blockchains,” and they tend to exist behind organi­zational firewalls to offer transparency, privacy, and control to a defined set of users. Often, permissioned blockchains are created for organizations that are not ready to share information on a platform that could potentially be viewed by competitors.

Permissioned blockchains contain a centralized, trusted identity management system that issues cryptographic certificates to qualified participants and a distributed database under a decentralized administration. This offers an improvement in transparency and auditability across involved parties over traditional distributed databases.

These advancements provide considerable opportu­nities for improvements in supply chain innovation and sustainable development. Permissioned blockchains can facilitate new means of green production, better monitoring of activities responsible for pollution and environmental degradation, and real-time collection and analysis of green or low-carbon data for timely decision making.

Creating Robust Supply Chains with BIoT

As supply chains become increasingly complex, the challenges of guaranteeing supplies, increasing transportation speeds, and ensuring product quality are becoming evident, particularly when it comes to food, medical supplies, and pharmaceuticals.

Blockchain’s ability to securely capture data and ensure consistency across supply chain operations is an excel­lent way to reduce (or eliminate) human errors and fraud. By simply collecting and recording data that was previously buried in proprietary databases, BIoT strengthens supply chains.

BIoT can also help track the amount of greenhouse gas generated at every point in the supply chain. Its advanced analytics and predictive algorithms can expose how manufacturers are collecting used products from lower echelons and recycling or salvaging them in safe, environmentally conscious ways — information formerly hidden inside closed-loop supply chains.

BIoT’s data-passport capabilities can be used to design prescriptive algorithms for allocating inventory or capacity to distribution centers and retailers. Manu­facturers and distributors can use blockchain to easily track individual pharmaceutical batches; for example, ensuring that the oldest products move out of the warehouse first and expired products are never delivered to retailers.

The agri-food market is another industry that can benefit from BIoT. Difficulties certifying the origin and quality of an agricultural product are as much a problem for consumers as they are for farms and distributors. BIoT can guarantee the traceability of the entire production system while ensuring more sustainable use of natural resources (like water) and reducing emissions associated with food production and transportation. IoT makes remote data collection efficient while blockchain ensures its security and perpetuity. In the case of food systems, that means providing omnipresent timestamp data from the raw material phase to the store shelf in a completely confidential manner. In transportation, BIoT can be used to track distances trucks travel, along with fuel use and emissions levels, leading to better-planned routes and more thoughtful warehouse placement.

In time, BIoT could be used to enhance and improve emissions trading systems (ETSs). A paper a few years back published in IEEE Access proposed HyperETS, a Hyperledger-based ETS that would provide “credible” trading services for polluters. Similarly, a more recent article in Energy, Sustainability, and Society proposed a blockchain-based Global Carbon Surcharge, which mimics a carbon tax but doesn’t require tax collection by governments.

[For more from the author on this topic, see: “BIoT: Integrating Blockchain & IoT for Sustainability.”]

About The Author
Cigdem Gurgur
Cigdem Z. Gurgur is Associate Professor of Decision and System Sciences at Purdue University. She is a data and management science expert with experience in optimization models under uncertainty and decision support systems development with algorithmic theory design. Dr. Gurgur’s work utilizes meta-analytics, computational models, and artificial intelligence techniques for resource allocation and applies mathematical programming integrating… Read More