Manufacturers are increasingly adopting the Internet of Things (IoT) to improve supply chain performance. IoT, in combination with newer blockchain technology, can help companies gain a new level of automation, transparency, security, and efficiency. The well-established global industrial IoT (IIoT) platform market is expected to grow from $394.48 billion in 2022 to USD $1,809.04 billion by 2030, representing a CAGR of 20.97%, according to Data Bridge Market Research. Meanwhile, Research And Markets estimates that the emerging global market for blockchain in manufacturing will expand from $1.2 billion in 2022 to $88.5 billion by 2030, growing at a compound annual growth rate (CAGR) of 72%.
The Internet of Things (IoT) in combination with newer blockchain technology is increasingly being adopted by manufacturers to gain a new level of automation, transparency, security, and efficiency. The well-established global industrial IoT (IIoT) platform market is expected to grow from $394.48 billion in 2022 to USD $1,809.04 billion by 2030, representing a CAGR of 20.97%, according to Data Bridge Market Research. Meanwhile, Research And Markets estimates that the emerging global market for blockchain in manufacturing will expand from $1.2 billion in 2022 to $88.5 billion by 2030, growing at a compound annual growth rate (CAGR) of 72%.
Arguably, the greatest use of IoT and blockchain together is aimed at providing manufacturers greater insight and control across their supply chains. IoT technologies, such as sensors and smart devices, provide accurate tracking and measures in real-time. Blockchain solutions complement this by providing a distributed ledger framework for verifying goods and materials, buyers and suppliers, pricing, contract terms, and more. Used together IoT and blockchain enable real-time monitoring, tracking, and traceability to increase supply chains’ speed, scale, and visibility; eliminate counterfeit goods transactions; and improve batching, routing, and inventory control.
How IoT Can Improve Supply Chains
Let’s look at the top ways IoT and blockchain are defining the future of supply chains:
- Enhance track-and-trace. In 2023, amid geopolitical conflicts, inflationary pressures, climate change weather events, and other disruptions, having a mature supply chain planning capability, agility, and end-to-end forward-looking visibility using digital capabilities will be critical. By combining IoT’s real-time monitoring support with blockchain’s shared distributed ledger, manufacturers can improve their track-and-trace accuracy and scale. This reduces the need for buffer stock by providing real-time inventory levels and shipment visibility. Additionally, manufacturers can more readily expedite and reroute urgent orders, minimizing disruptions to production schedules and customer shipments. The highest adoption is markets that involve perishable goods or are highly regulated, such as supply chains in the food and beverage, medical product, pharmaceutical, and aviation industries. The National Institute of Standards and Technology (NIST) published a report on using blockchain and related technologies to improve manufacturing supply chain traceability for manufacturers who want to learn more.
- Lower costs. The ability to reduce inventory levels using insights from blockchain and IoT can help manufacturers to cut their inventory management costs and bank fees for letters of credit. Notably, the availability of blockchain via the cloud is helping to increase the potential return on investment. For example, in its study, “Pairing Blockchain with IoT to Cut Supply Chain Costs,” Boston Consulting Group (BCG) calculated how much a $1B electronics equipment company could save by implementing blockchain-as-a-service, a decentralized track-and-trace application, and 30 nodes that share among key supply chain stakeholders. The study found that the electronics equipment company could save up to $6 million per year.
- Cut counterfeiting. According to the World Health Organization (WHO), approximately 1 million people are harmed by counterfeit drugs, 50% of pharmaceutical products sold through rogue websites are considered fake, and up to 30% of pharmaceutical products sold in emerging markets are counterfeit. IoT and blockchain strengthen pharmaceutical and healthcare serialization techniques where a unique identity (e.g., a serial number) to each sealable unit, which is then linked to critical information about the product’s origin, batch number, and expiration date, reduces counterfeiting. Manufacturers in other markets, particularly medical devices, and luxury goods, such as watches and jewelry, are early adopters of IoT and blockchain to cut the sale of counterfeit products.
- Strengthen supply chain management. Between the current economic pressures and nations becoming more skeptical about cross-border trade cooperation, and manufacturers face stronger pressure than ever to optimize their supply chain management(SCM). As a result, asset tracking using global positioning systems (GPS), barcode scanners, and radio frequency identification (RFID), enabled by IoT-driven real-time monitoring, are becoming more critical. The use of IoT and blockchain to support digital threads, trade financing, and contract management also have high adoption potential to further increase manufacturers’ SCM efficiency and effectiveness.
- Effectively track asset performance. Manufacturers increasingly rely on IoT data to track an asset’s performance throughout its lifecycle, further streamlining supply chain performance. Here, a vehicle or spare part sends performance data and events (captured by one or more sensors) to its digital twin as it moves from the manufacturer to the dealer and then to the new owner. Blockchain technology is then used to securely document the asset’s history as it happens. The use of digital twins powered by IoT data in combination with blockchain is gaining the fastest adoption of becoming more prominent across large-scale machinery and capital assets.
- Ensure quality while reducing waste. The use of IoT for real-time production and process monitoring has long been used to identify issues on the shop floor that could result in faulty products, allowing manufacturers to quickly take corrective action in order to ensure quality and reduce waste. Now the combination of IoT and blockchain is helping to reduce waste across supply chains involving perishable materials, ingredients or goods, such as pharmaceuticals and food and beverage. Notably, IBM’s Food Trust uses blockchain technology to connect growers, processors, distributors, and retailers to a permissioned, permanent, and shared food system data record, improving supply chain accountability, traceability, and visibility. By ensuring quality while reducing waste, this transparent and efficient supply chain benefits both businesses and consumers.
IoT and blockchain technologies are beginning to offer measurable, substantial advances in supply chain management. These technologies help manufacturers to improve customer fulfillment, achieve profitability targets, and make supply chains more resilient to disruptions. Companies are also beginning to prepare their supply chains for a responsible future by guaranteeing that their production and transportation systems are safe and environmentally friendly, raw materials are obtained from sustainable sources, and that workers are paid fair wages. These trends are making it clear that manufacturers seeking optimized supply chains, improved customer fulfillment, and a responsible, sustainable future must strategically integrate IoT and blockchain technologies into their platforms. This synergy will spur innovation and make manufacturing smarter, more connected, and more profitable.