How Smart Contracts can bring Trust and Provenance to the Supply Chain
Manufacturers often use multiple third party logistic providers to transport their goods from the factory floor to their customers, but their supply chain is fraught with inefficiencies. Up to 25 to 30 people across different companies may be involved at various stages of the shipping process of one item.
These interactions are currently recorded independently by each company on paperwork or digital systems, which makes it very hard and time consuming for the manufacturer to consolidate this data and make sense of it. Having multiple documents coming from various sources in an untimely manner leaves ample room for documents to be mislaid or doctored. Supply chains need an efficient and foolproof system that everyone involved in the supply chain has access to in real time. So what is the solution?
Australian based company UCOT has delivered the holy grail, solving the above problem and other supply chain problems via their digitized supply chain ecosystem. Their system is built with the latest IoT and blockchain technologies, enabling the creation of smart contracts which can be stored securely on the blockchain. To help you understand how this works, let’s first explain what blockchain and smart contracts are and then we will explain how they specifically solve supply chain problems.
Blockchain and Smart Contracts Explained
Very simply said, blockchain is a digital, secure and immutable ledger. Data or information on the blockchain cannot be altered once it is uploaded and recorded and it is visible to all participants in either a private or decentralised network.
Consolidation of all transactions and incidents in the supply chain can be recorded in real time by having all participants upload their information to a shared blockchain. This removes the need to manually consolidate documents days or even weeks after the deliveries have been made.
In some instances, documentation can be approved and processed before the goods even get to their final destination and this is made possible by using smart contracts.
Smart contracts are digital agreements that will self-execute when predetermined conditions are met. An example of a smart contract in the supply chain is that payment is released to a logistics provider once it’s been recorded on the blockchain that they’ve shipped the products in the standard that was required by the manufacturer and have delivered the products to the next company in the supply chain.
Smart contracts on the blockchain have the following distinct advantages:
Autonomy: There are no intermediaries in the process as the contract is executed automatically by the network.
Trust: The contract is placed on a shared ledger and as such cannot be altered or removed by one party.
Savings: There are no intermediaries involved so you don’t have to pay 3rd party fees.
Safety: The documents are kept in a safe/encrypted environment and cannot be altered by parties with ulterior motives.
Efficiency: Software code executes the smart contracts and removes the need for manual consolidation of dispersed hardcopy and digital records.
UCOT’s IoT Device adds more Provenance to the Smart Contract Function
UCOT enables smart contracts to become even more valuable via their IoT devices. It all starts with a narrowband-IoT microchip, which can be embedded in a product’s packaging. The microchip can objectively monitor various shipping conditions in real time such as:
· Location;
· Temperature;
· Humidity;
· Pressure;
· Ambient light;
· Whether a product has been opened or tampered with.
This collected data is then uploaded and synchronized to the blockchain in real time.
A UCOT IoT device delivers the following additional benefits to smart contracts:
More T&C’s can be Built into Smart Contracts
Further terms and conditions, other than the handover of goods, can be built into smart contracts.
Take medicine for example. Medicine needs to be transported within a certain temperature range and it’s important that this is adhered to by all logistics providers. UCOT’s IoT device records temperature for the entire journey and sends alerts if the temperature drops or rises significantly.
In the above scenario a smart contract can be written in such a way that it automatically triggers an insurance clause when there is an incident that is outside of the shipping standards specified by the manufacturer. The responsible party can be easily identified through real time data provided by the IoT device.
Data Gathered Independently of Third Parties
The UCOT IoT device tracks every step in the supply chain without the need for third parties to scan or document information at any stage of a product’s journey. Thanks to UCOT, manufacturers now have access to a system that can verify a product has not been compromised in any way on its journey from a manufacturing facility to a customer. This tamper proof process will maintain the integrity of their products.
It also gives customers the confidence to buy their brand knowing they are receiving the original product, that it has been delivered to them in optimum storage conditions, and that it hasn’t been tampered with or exposed to environmental factors that could potentially alter the effectiveness of the product.
Other Advantages of UCOT’s Ecosystem
UCOT’s supply chain ecosystem has many more advantages for manufacturers, on top of enabling smart contracts on the blockchain. The information gathered from an IoT device also enables the following:
Reducing counterfeit and product theft: UCOT’s IoT sensors can report on whether products were opened or tampered with and alert manufacturers in real time when this happens.
Disposing of damaged goods: Once an alert has been sent to say goods have been stored incorrectly whilst in transit, an order can be given to dispose of damaged goods at the nearest disposal facility instead of shipping the damaged products to its end destination, saving the company further distribution costs.
Reacting proactively to any incidents in real time: Manufacturers can send another shipment and contact the end customer, instead of waiting for the end customer to contact the manufacturer with complaints about compromised or damaged products.
In summary, UCOT’s supply chain solution enables efficient reporting and automation using their world first IoT solution combined with smart contracts in a blockchain based ecosystem.
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