The supply chains of the world still depend on paper documents and dated processes which impact the global economy and hamper international trade.
The IOTA Foundation has defined solutions based on distributed ledger technology (DLT) that could help in solving these issues.
Writing on the IOTA Foundation’s blog, Jens Lund-Nielsen talked about setting data free from “proprietary actors’ systems” and increasing visibility through the use of DLT.
The Problem with the World’s Trade
Global trade still depends on paper documents and old processes that have a significant economic impact.
The current slow processes can lead to cash flow issues as containers and trucks wait idly at ports for paper documents. The lack of inventory visibility is another drawback in the current disconnected system.
Problems related to missing documents, data inadequacies, and improper location tracking are all faced on a daily basis.
Lund-Nielsen suggests that if all countries could increase their cross-border performance “to only 50% of the world’s best,” it could increase the global GDP by 5%.
As many actors, both public and private, are involved in the complex global supply chain, it produces a large amount of data across value chains as it’s logged into different software systems and shared via paper copies.
These practices often result in data that becomes wrong, misleading or shortened as it makes its way further down the supply chain.
What’s the Solution?
Lund-Nielsen suggests that increasing visibility and providing access to original trusted data is one of the key elements in changing the current state of supply chains. He writes:
“The promise of DLT is to set data free from proprietary actors’ systems and formats to be available on demand and in response to any event.”
Regarding private data being made available to too many participants, Lund-Nielsen explains:
“Despite the increased sharing availability introduced by DLTs, data will still only be available to approved authorities or businesses. This would allow not only for efficiency gains but also provide a broad range of opportunities for innovation and new data-driven services and business models.”
The use of DLT will also move the world to a paperless trade system and remove red tape from borders.
He also mentions the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) which ensures that governments will update cross-border customs procedures and make clearances of goods faster.
How IOTA Could Impact The Supply Chain
Using IOTA’s Tangle, all parties involved in the supply chain can get one version of the documentation, without depending on the inaccuracies and incompatibilities of legacy systems.
The world loses goods worth $4 trillion each year to these supply chain issues, which could be mended with the use of IOTA’s blockchain technology.
He says that the IOTA Tangle is well-suited to the supply chain domain, given its scalability and feeless transactions.
This ensures that even zero-value transactions can be used to secure the integrity of data exchanged. This can open up opportunities for new business models.
IOTA Masked Authenticated Message (MAM) protocol provides end-to-end security with tailored authorized access rights which make it a great fit for building future trade facilitation systems.
Lund-Nielson did not mention any specific use cases of IOTA in managing supply chains. These details will be shared in an upcoming blog post in January.
IOTA Talks About Supply Chain Challenges and Its DLT Solutions was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.