The Role Of Blockchain And IoT In Retail Supply Chain
Written By: Gargi Sarma
Introduction:
Within its intricate supply chain, the retail business faces numerous obstacles, such as inefficiencies, a lack of transparency, and difficulties tracing products from manufacturer to consumer. Nevertheless, new technologies that address these persistent problems, such as blockchain and the Internet of Things (IoT), have the potential to completely transform supply chain management.
Figure 1: Macro Shifts and Industry Trends Drive Retail Supply Chain Evolution (Source: Deloitte)
Pricing, forecasting, and assortment planning are three major issues in retail supply chain management that might be greatly improved by integrating blockchain and IoT technologies.
Enhancing Pricing Strategies through Blockchain and IoT:
Blockchain Ensures Transparent and Secure Transactions:
Blockchain records transactions in an encrypted, unchangeable ledger spread across multiple nodes, ensuring tamper-proof data and fraud prevention through cryptography.
Blockchain fosters transparency in retail pricing by providing a verifiable record of product interactions, ensuring prices reflect actual market forces, and preventing manipulation.
Retailers can use blockchain to demonstrate the legitimacy and integrity of their pricing schemes, building consumer trust and fostering fair competition in the market.
Figure 2: Architecture of IoT Involved in Analytics (Source: Microsoft Azure)
The Internet of Things, or IoT, is a network of devices linked together with sensors and data collection capabilities. IoT devices can be used in physical retail settings and across the supply chain in the retail sector to gather data in real-time on a variety of consumer behavior and market trends.
IoT sensors, for example, may monitor product interactions, track foot traffic in stores, and evaluate purchasing patterns. Retailers may learn a lot about customer preferences, demand swings, and competition dynamics from this data. Retailers may make well-informed decisions in real-time by gaining a thorough understanding of consumer behavior and market trends through the continual collection and analysis of this data.
QR code as an emerging technology:
Blockchain technology combined with QR codes provides a game-changing way to guarantee traceability and transparency across the supply chain, especially when it comes to fresh produce's journey from the farm to the table. Several important criteria can be tracked and confirmed by using blockchain technology in conjunction with QR codes embedded at different stages of the supply chain:
Farm-to-Fresh Traceability: By assigning a unique QR code to a particular batch or lot of produce, customers can scan the code and follow the product's path from the farm to their plate. Customers' trust is increased as a result of the guarantee of authenticity and transparency regarding the produce's origin.
Real-Time Delivery Time Tracking: Blockchain technology allows for real-time tracking of a product's journey, including how long it takes to get from the farm to the customer. Customers can test the freshness of the produce when it arrives by scanning the QR code to get information about the delivery time.
Temperature Monitoring: Data on the state of the temperature during transit can also be stored using QR codes that are integrated with blockchain technology. Temperature variations can be continuously monitored by sensors inside the package, and the blockchain can store this data. By scanning the QR code, customers can confirm the product's temperature history and make sure it was transported and kept in an ideal manner to preserve freshness.
Quality Assurance: The blockchain can be used to track and record several quality metrics, including humidity levels, handling procedures, and storage conditions, in addition to temperature. By scanning the QR code, users may obtain this data, which gives them insights into the quality control procedures followed through the supply chain.
Figure 3: Architecture of IoT Involved in Fresh Produce Block Chain
All things considered, the combination of blockchain technology and QR codes provides a strong way to improve fresh produce's farm-to-table transparency, traceability, and quality control. Customers can increase trust and confidence in the food supply chain by making educated selections based on trustworthy information that they can obtain by scanning QR codes.
Examples of Retail Companies Utilizing Blockchain and IoT for Dynamic Pricing Optimization:
Walmart: The massive retailer uses blockchain technology to improve supply chain traceability and transparency. Walmart gathers data on product demand and inventory levels in real-time by utilizing IoT sensors and data analytics. To optimize pricing strategies and make sure that prices are dynamically updated based on market conditions and consumer preferences, this data is then integrated with blockchain.
Amazon: To collect information on customer behavior and purchase habits, Amazon uses Internet of Things devices like Dash buttons and Echo. Blockchain technology is used with data analysis to allow for dynamic pricing changes on the e-commerce platform. With the help of its pricing algorithms, which track rival and market pricing patterns constantly, Amazon can maximize profits while providing competitive prices to customers in real-time.
Alibaba: To improve confidence and transparency in its online marketplace, the massive Chinese e-commerce company is using blockchain technology. Alibaba tracks product movement and keeps an eye on inventory levels by integrating IoT devices into its supply chain. Alibaba ensures fair and competitive prices for customers by optimizing pricing strategies based on real-time demand signals by fusing blockchain technology with Internet of Things data.
All things considered, these illustrations show how retail businesses are using the convergence of blockchain technology and the IoT to improve pricing tactics, increase transparency, and provide value to consumers in the fast-paced market environment of today.
Figure 4: Benefits of IoT in supply chain and logistics (Source: appinventiv)
Exploration of IoT Sensors for Data Collection:
IoT sensors are essential to the change in forecasting because they track inventory movement and customer preferences, among other components of the retail supply chain. These sensors are integrated into distribution hubs, retail locations, and warehouses to continuously monitor product availability, shelf life, and consumer interactions. Retailers may gain a full picture of supply and demand dynamics by using IoT devices to gather real-time data on inventory levels, sales transactions, and consumer behavior.
Blockchain's Contribution to Data Integrity:
Blockchain technology ensures data integrity and reliability, which improves forecasting model accuracy. Data is safely saved and timestamped on the blockchain ledger as it is gathered from IoT devices along the supply chain. This unchangeable record prevents data manipulation and tampering, giving retailers a reliable source of information for forecasting. Retailers can confidently examine past data and forecast future demand trends, inventory requirements, and supply chain optimization plans by utilizing blockchain.
Examples Illustrating Integration of IoT Data with Blockchain:
Walmart: To manage inventory movement and keep an eye on product availability in its shops and warehouses, Walmart uses Internet of Things sensors. Blockchain technology is combined with this real-time data to guarantee supply chain transparency and traceability. Walmart can effectively predict demand for particular products, adjust inventory levels, and reduce stockouts and overstocking by studying this data.
Target: Target uses Internet of Things (IoT) sensors in its retail locations to gather information on customer preferences and purchase trends. Blockchain technology is used in conjunction with this data to establish a safe and trustworthy database for forecasting. Target can forecast demand for seasonal products, identify market trends, and maximize product assortment to satisfy customer expectations by examining trends and patterns in consumer behavior.
Amazon: To collect real-time data on consumer interactions and product sales, Amazon integrates Internet of Things devices like Dash buttons and Echo speakers. For its e-commerce platform, this data is combined with blockchain technology to improve forecasting model accuracy. Amazon can anticipate demand for particular products, modify pricing tactics, and enhance inventory management to effectively satisfy customer demand by examining customer comments, browsing history, and purchase habits.
The retail industry's forecasting is revolutionized by the combination of IoT data and blockchain technology, which gives retailers precise, dependable, and useful insights into supply and demand dynamics. Retail chains may enhance consumer satisfaction, streamline inventory management, and promote long-term growth in the current competitive market environment by capitalizing on this synergy.
Figure 5: Assortment planning example (Source: thought works)
For the omnichannel network to serve a variety of target segments, it must be optimized. The size and proximity of the client must be taken into consideration while choosing the assortment's breadth and depth. Omnichannel assortment planning must promote corporate objectives including volume, sales, coverage, quantity of orders, and profitability. Figure 4 illustrates how this could seem. The nodes in the omnichannel network are arranged spatially to serve a variety of target markets. The size and proximity of the consumer have a proportionate impact on the assortment's breadth and depth. Results like volume, revenue, coverage, order size, and profitability are all aided by it.
Blockchain's Role in Establishing End-to-End Traceability:
By producing an open and unchangeable record of product transactions, blockchain technology is essential to enabling end-to-end traceability in the supply chain. The blockchain ledger records and verifies every stage of the supply chain, from obtaining raw materials to manufacturing and distribution. This guarantees easy tracing and authentication of the products' source and validity. Blockchain offers an impenetrable and safe platform for recording a product's whole lifespan through decentralized consensus methods and cryptographic technology.
Transparency and Well-Informed Assortment Decisions:
Retailers can make well-informed assortment decisions that are in line with customer values and preferences because of the transparency that Blockchain technology provides. Retailers can create assortments that appeal to their target market by gaining access to verified information on the provenance of products, manufacturing procedures, and sustainability policies. Retailers are also better equipped to adapt to new trends and customer needs thanks to this transparency, which keeps their product offerings current and competitive.
Retail Brands Using Blockchain-Enabled Traceability Examples:
Patagonia: The well-known outdoor clothing company uses blockchain-enabled traceability to guarantee transparent supply chains and ethical sourcing. Patagonia gives customers insight into the lifespan of its products by logging details on the Blockchain, including the source of ingredients, production methods, and environmental impact. Because of this openness, Patagonia is able to make well-informed selection judgments that uphold its core beliefs and give priority to sustainability.
Wine.com: The online wine store Wine.com uses blockchain technology to confirm the provenance and authenticity of the wines it sells. Wine.com gives customers confidence regarding the quality and authenticity of the wines they buy by encrypting information like vineyard location, grape variety, and production techniques into the Blockchain. Because of its transparency, Wine.com can provide a wide range of premium wines from around the globe and create assortments that are customized to each customer's preferences.
Adidas: To guarantee responsibility and transparency in its supply chain, the international sportswear brand incorporates blockchain-enabled traceability. Adidas establishes a verifiable record of product provenance on the blockchain by monitoring the procurement of components like cotton and rubber as well as the production processes of its shoes and clothes. Adidas can make well-informed judgments about product assortment, give ethical sourcing procedures top priority, and gain the trust of customers who respect sustainability and ethical manufacturing thanks to this transparency.
By offering transparency, authenticity, and responsibility across the supply chain, blockchain-enabled traceability enables retailers to simplify assortment planning. Retail brands can use this technology to curate assortments that are in line with consumer preferences, sustainability objectives, and ethical ideals, all of which will increase customer loyalty and confidence.
Conclusion:
In conclusion, retail supply chain management is undergoing a revolutionary change as a result of the combination of blockchain and IoT technology. These breakthroughs present previously unheard-of chances to tackle enduring issues and transform crucial areas like assortment strategy, forecasting, and pricing.
Blockchain promotes confidence and integrity throughout the supply chain by guaranteeing safe and transparent transactions. Dynamic decision-making is made possible by the real-time data collection capabilities of IoT, which offer priceless insights into market trends and consumer behavior.
Retailers that are utilizing IoT data integration and blockchain-enabled traceability are leading the way in innovation, optimizing operations, improving consumer experiences, and fostering long-term growth. These technologies will have a profound effect on the retail sector as they develop further, changing how companies run and engage with customers in a world that is becoming more digitally and globally connected.
About RapidPricer
RapidPricer helps automate pricing and promotions for retailers. The company has capabilities in retail pricing, artificial intelligence and deep learning to compute merchandising actions for real-time execution in a retail environment.
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