IoT, AI, and Blockchain: The Future of Your Smart Supply ChainJun 27, 2018
IoT. AI. Blockchain. 3D Printing. Big Data. Augmented Reality. Advanced Robotics. These are some of the technologies getting considerable hype for their supposed ability to forever alter the world and how we do business. In fact, a company called Neurogress was recently in the spotlight for its efforts to combine blockchain, AI, and IoT to enable people to one day control electronic or mechanical devices with their minds. A wearable neural interface allows the software to recognize brain commands, eliminating the need for implanted sensors. The brain signals are converted to AI via a specialized device, opening up new opportunities for those with physical impairments as well as home appliance control and more.
This is big stuff. So how do we begin to wrap our minds around even a fragment of the potential applications and implications for supply chain? Perhaps it’s best to start by establishing a basic understanding of three of these revolutionary technologies.
Internet of Things (IoT)
IoT spans the billions of devices around the world with an IP address that can connect to a network and exchange information. This extends far beyond the obvious gadgets like smartphones and laptops. This vast collection includes all types of equipment with sensors and monitoring capabilities. In essence, IoT spans everything from fitness trackers, thermostats, vending machines, and home appliances to software, industrial scales, home health tools, and MUCH more. While the potential applications are various and vast, the principal advancement in technology that enables IoT is the move in Internet Protocol (IP) from IPv4 to IPv6. This increases the length of each IP address from 32 bits to 128 bits, meaning 3.4 X 1038 IP addresses could be represented on IPv6. To put this in perspective, an IPv6 address could be assigned to every atom on the surface of the Earth, and there would still be enough addresses left for another 100 Earths.
Artificial Intelligence (AI)
This phrase was originally coined in 1955 and seems fairly well understood, perhaps due to the publicity around IBM’s Watson technology. Machine Learning (ML), the most significant variant of this technology, has been widely referenced within the business community. According to Harvard Business Review, “ML is the machine’s ability to keep improving its performance without humans having to explain exactly how to accomplish all the tasks it’s given. Within just the past few years machine learning has become far more effective and widely available, and although AI is already in use in thousands of companies around the world, most big opportunities have not yet been tapped.”
As described in a prior 4SIGHT blog post, Logistics and the Blockchain, blockchain is an open, distributed ledger that utilizes cryptography to record and secure transactions between two parties efficiently and in a verifiable and permanent way. Because records on the blockchain are decentralized and stored in multiple locations, there are considerably higher levels of security than information stored on the internet.
Supply Chain Ramifications of These Technologies
Now let’s look at how the three technologies detailed above could play a role in transforming how goods move through the supply chain.
A unique digital identity: The ability to assign a digital signature to virtually anything with an IP address will mean that all goods can have their own internet identity. Because of this, items have a dedicated electronic location and can report on their condition, progress, status, etc., as they move and advance. In concert with this, AI solutions will be able to automatically interpret updates/impacts and adjust plans accordingly. These can be triggered by mobile updates that are delivered in near real time via routine electronic communications with transport vehicles (e.g., trucks, ships, trains, planes) for goods in transit. This AI cognitive learning element is different from traditional planning of if/then scenarios because the technology will be able to formulate new plans in situations it hasn’t encountered before.
Product provenance: Cradle-to-grave tracking of unique items becomes possible through a combination of the unique digital identity and blockchain’s permanent record. This means an associate placing items into a carton can verify where the goods are coming from, which has relevance for establishing country of origin or guaranteeing that product has been grown according to organic farming requirements.
Flexibility: As plans are changed and actual or projected transaction data is modified, everyone involved in the transaction can see and process the data in an encrypted, distributed data ledger (e.g., blockchain solution) and execute a consensus process to approve the change. Or, the approval process can be automated via a pre-defined set of rules, conditions, thresholds, and parameters.
Contract enforcement: Once the transactions are approved and executed, all physical and financial conditions can be enforced and executed automatically via the application of blockchain-enabled smart contracts. It’s critical that the terms and conditions of each contract be continually executed against to ensure goods move through the supply chain as required and all parties abide by the rules.
As more commerce is conducted between parties, machine learning will continue to consume more historical information and improve its decision-making based on growing amounts of experiential data. It will adjust rules, conditions, thresholds, and parameters in accordance with the contracts in place. When conditions change, those impacting more than one party can be re-written and further incorporated into the electronic smart contracts, enabling further automation and enforcement.
End-to-end visibility and security: As goods move from initial production through final consumption, all associated activities can be captured via their unique IoT identity and stored in the blockchain solution for posterity, with distributed access and ‘unhackable’ levels of encrypted security.
These are just a tiny sampling of some of the potential applications for several of these game-changing technologies. And while there will certainly be some physical and practical limitations in terms of the potential ways these new technologies could impact how we conduct business, or even go about our daily lives, it does increasingly seem like the possibilities may be limited only by our imaginations and ambitions.