Blockchain and the IoT do more than add transparency and traceability to supply chains. Successful utilization revolutionizes supplier relationships through tech-driven trust. - BY Shaniqua Thomas
Blockchain and the Internet of Things (IoT) are technology partners that can increase transparency and traceability in supply chains. The obvious benefit is organizations can track goods through tiers of suppliers, many of which were not easily discoverable before the introduction of the technologies. What is not consistently recognized is that they also enhance supplier relationships, producing additional benefits.
Combining IoT and blockchain delivers secure, shareable data to improve supply chain efficiency so organizations can respond quicker to potential or actual disruptions. However, there are even more benefits when the technologies contribute to better supplier relationships and supply chain resilience. Businesses tracking the flow of resources and goods end-to-end can also ensure suppliers adhere to corporate commitments to support environmental sustainability, social responsibility, product quality, and communities. Through enhanced supplier relationships, IoT and blockchain support a more resilient, agile, and effective supply chain.

Adding Visibility to the Supply Chain
Suppliers have many objectives, from minimizing risks and disruptions to enabling an organization to meet customer needs. Before technologies like the IoT and blockchain, sourcing and procurement groups could only track the flow of resources and goods in the later stages of the supply chain. Food producers did not know which local farms in global communities provided agricultural products, and manufacturers did not know if child labor or underpaid workers were used to produce resources and components. Suppliers could not prove they supported corporate environmental and social goals in ESG. The primary supplier relationships were with Tier 1 and maybe Tier 2 suppliers, leaving large gaps in supply chain traceability.
The IoT and blockchain work together to add visibility deep into the supply chain, supporting stronger supplier relationships. The IoT uses sensors to collect data to track components and finished goods. Blockchain enables data to be recorded in immutable (unchangeable) ledgers, reducing the risk of fraud and providing assurance that transaction records are authentic. Together, they can deliver numerous other benefits, like data for predictive analytics. They may provide data on diverse suppliers in lower tiers delivering exceptional service, giving them the visibility they would not have otherwise.
Developing and Strengthening Supplier Relationships
Resilient suppliers can stay aligned with corporate goals despite factors that create vulnerabilities, like environmental disasters, resource shortages, and geopolitical tensions. Supply chains are networks of integrated suppliers that exchange information with each other and with buyers, and today, data flows are necessary for these exchanges. Information flows through the network when IoT data is recorded in a permissioned blockchain on a shared but unchangeable ledger. Use cases continue to expand, strengthening supplier relationships and creating more resilient supply chains.
Some use cases beyond enhancing visibility and traceability for essential product components include predicting risk, increasing data and data analytics accuracy, establishing a system of trust among suppliers, and taking advantage of technologies like smart contracts and artificial intelligence. Despite increasing expectations for businesses to set ESG goals and to prove goals are being met, or at least that progress is being made, many organizations cannot provide proof of factors like ethical sourcing and fair labor practices.
IoT-feeding blockchain ledgers build supply chain resilience in other ways. For example, the IoT can feed predictive analytics models to improve demand forecasting, making supply chain management proactive. The real-time data helps companies adapt to various disruptions. Organizations can adjust production schedules due to unexpected market fluctuations, which allows suppliers adjust theirs. The IoT can promote sustainability by contributing to route optimization and reducing the carbon footprint.
Successful supplier collaboration depends on trust, which is essential to supply chain resilience. Trust is built by increasing visibility into the supply chain. Supply chain resilience attributes also include flexibility, control, visibility, and collaboration. The IoT supports all four attributes. Real-time visibility enables tracking of products and deliveries. Real-time supply chains with blockchain-supported smart contracts are more flexible due to machine-to-machine communication, allowing suppliers to recover rapidly from disruptions. The IoT and blockchain support supply chain control by enhancing data collection, which can help increase productivity while reducing costs. In the area of collaboration, they speed up the sharing of information in real time.
Supply Chain Intelligence
An example of the use of data in the blockchain is the IBM Food Trust, a collaborative network of suppliers that includes growers, processors, wholesalers, distributors, manufacturers, and retailers. Built on the IBM Blockchain platform, it allows users to connect through permissioned, immutable, and shared records of food sources, transactions, and details in the end-to-end global network of organizations in the supply chain. Sharing traceability data across a wide network supports the five key elements of federal food compliance standards: capture, store, share, monitor, and report. Data is uploaded from various sources, including data captured from the IoT, web forms and spreadsheets, B2B SaaS systems, and ERP and manufacturing labeling systems.
Organizations have full control over the entities able to access the IBM Food Trust, which monitors compliance and even offers guidance if there are data issues. The additional benefits include monitoring shelf life, managing product certificates, improving recall investigation accuracy and response times, and collecting location, cold-chain, and emissions data through IoT sensors.
Building Supplier Trust
The IoT and blockchain can boost many industries, including manufacturing, medical, mining, retail, and logistics. The technologies deliver a combined impact on supply chain resilience, including improved trust and collaboration, enhanced risk management, better compliance with environmental and social standards, and agility and adaptability. The IoT can predict equipment maintenance needs before failures occur, optimize inventories, and enhance logistics planning. Blockchain enables end-to-end visibility, smart contracts, immutable records, and audit trails.
All these benefits create improved supplier relationships built on trust backed by technology. Technology helps increase trust levels by ensuring suppliers perform as promised.