CSCMP's Supply Chain Quarterly
September 22, 2019
Forward Thinking

Pilot project connects blockchain and "smart" pallets

By feeding data from Internet of Things-enabled pallets into its digital ledger system, the chemical manufacturer BASF hopes to improve supply chain visibility and decision making.

Like many organizations, the German chemical company BASF wants to improve visibility into its supply chain to help it make faster, better decisions. One way it's trying to do this is by bringing together one of today's hottest technologies—blockchain, a digital ledger system that provides an immutable record of transactions that can be shared and audited by supply chain partners—with one of the most basic of logistics tools, the pallet.

To be sure, these are no ordinary pallets. Instead, they are "smart pallets," created by Dutch startup Ahrma Holding BV, that are embedded with active, battery-powered, wireless transponders. The transponders can record and transmit into the cloud the pallet's position and movement, ambient temperature, and load state, as well as information about any acceleration or impacts that it has sustained, according to Andreas Wollny, senior manager, digital innovation, at the Performance Materials division of BASF. In a sense, the pallets will be a part of BASF's industrial Internet of Things.

BASF first learned about the smart pallets when the company was contacted by Ahrma about providing a coating that could be used to protect their wood-composite pallets. The chemical company was intrigued by the product and wondered if it could be used in its own supply chain.

Around the same time, BASF was participating in an initiative known as Startup Autobahn, which brings together tech startups with more traditional companies, such as automakers Daimler and Porsche, logistics giant Deutsche Post DHL, and IT service company DTC Technology. One of the startups BASF was working with was the blockchain specialist Quantoz. BASF wondered if it could combine Ahrma's smart pallets with the Quantoz blockchain technology in order to track and trace goods in its supply chain, said Wollny.

The pilot project will test whether the data from the smart pallets can be uploaded to Ahrma's cloud Supply Chain Big Data system and then transmitted to Quantoz's solution. At this point in the pilot, BASF is not willing to make public exactly how it is using its blockchain-connected smart pallets. However, the company says it believes that this system will make it easier to locate and make optimal use of all of its pallets, according to Jan Buchmann, global head of innovation management at BASF's Supply Chain Operations and Information Services unit. This will reduce the costs associated with unused, lost, or stolen pallets. Additionally, the transponders will help the company better detect the conditions its pallets and products are experiencing. By tracking ambient temperature, for example, the pallets could detect whether the cold chain had been interrupted; by tracking acceleration and location, the pallets could detect whether products might have been damaged by an impact.

The company even envisions a time when it will be able to recognize when a delivery is incomplete or damaged before it arrives at the dock. This information could also be used to help BASF and its supply chain partners improve their processes to decrease damage and spoilage. And because blockhain provides a transparent and immutable record of transactions that can be shared by a wide range of supply chain partners such as suppliers, customers, banks, and customs authorities, BASF also believes that the technology will improve business models and processes such as vendor-managed inventory, automatic customs clearance, and pay per use, according to Buchmann.

Susan Lacefield is Executive Editor of CSCMP’s Supply Chain Quarterly.

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