September 17, 2019 Last updated September 16th, 2019 2,743 Reads share

Why are Modern Businesses Investing in IoT Driven Smart Contracts?

IoT Driven Smart ContractsImage Credit: Deposit Photos

Starting off a business day with great gear and dusting off old business operational patterns are crucial for growth. With the growing competition, every business is trying hard to up its ante to make a mark in the volatile and ruthless marketplace. With the intention to have a great reputation in the market, it gets crucial for businesses to invest in smart contracts. This is the 21st century and anything less than a technologically protected contract is a wrong move that might lead to irreversible losses.

A smart contract could be defined as a computer protocol that is designed to facilitate, verify, or enforce the performance or negotiation of a contract on a digital basis. Without the requirement of any third party, smart contracts enable the performance of credible transactions, fluently.

The traditional methods of trading had several flaws in them because there was nothing to trace a flaw in the first place. With the availability of superior solutions, driven by the Internet of Things, trading methods have become revolutionary and systematized. Basically the end to end connectivity coupled with Blockchain technology enables tracking the real-time status of the cargo inside the trailer. The next step is the compilation with the conditions mentioned in the smart contract. This ensures a justified execution of smart trade contracts, like an electronic Bill of Lading (BoL).

Before jumping into any assumptions, here are a few things you must know about smart contract.

  • Just because they are termed ‘smart’ does not mean that they are above human intelligence. They are as smart as the people coding it, are. To make it effective, sound information at the time of its formation is required.
  • Not all smart contracts are legal contracts. They can be so if certain conditions are met. So, save yourself the confusion as legal contracts are accepted by courts and/or law enforcement, while all smart contracts are not. As consensus is crucial, BoL crafted on Blockchain, anyhow falls under the legal umbrella.

But what happens when a legal smart contract (Bill of Lading) is minutely designed by IoT? Let’s find out.

  • It has the tremendous potential of tracking performance in real-time which generates supreme cost savings. Be it the compliance of BoL terms, reduction of working capital expenditure, curbing operational overheads, all happen almost in a snap!
  • BoL is the evidence of the contract of carriage, receipt of goods and document of title. With IoT driven solutions, one can claim swift insurance. Rather than waiting for the work to be done manually, it can just happen in a blink of an eye.
  • As Bill of Lading is completely related to the shipment done by road. Any mishap can take place in such a scenario. The Bill of Lading could be lost. In case it is lost all the information regarding the shipment will be lost. The full name, address of the mover, vehicle ID number, delivery destination and more could not be retrieved. If the same will be available in an electronic version, then it will not take long to bounce back to the crucial data within a short time frame.
  • Keeping the possibilities of damage under consideration, it is a must. Getting rash drivers is a common thing. Several cases of damage have taken place due to the negligence of the driver. Be it over speeding or dozing off to sleep. Once the terms and conditions of Cargo Safety are set through the digital platform, better safety will anyways be guaranteed.
  • It is natural for errors to exist when things are done manually. With the electronic Bill of Lading, the entire manual work process can be eliminated. This will make the Bill of Lading more efficient, absolutely error-free and updated.
  • Shipping contracts are not something to play around with. Unfortunately, if lost, the company suffers losses of a higher margin. There is no chance for an electronic Bill of Lading to get lost so easily.

With smart contracts, a business will not have to face the given list of problems:

  1. The manipulation/alteration of the contracts,
  2. Risk of theft,
  3. Complicated amendments,
  4. Unknown cargo damages,
  5. Manual cargo supervision exchange,
  6. Challenging insurance claims,
  7. Physicality of contracts,
  8. Doubtful contract execution

After the benefits, it is time for us to explore the features of the IoT smart contract.

  • Manages Container Remotely: This feature turns containers into digitally connected devices. Thus making them capable of expressing humidity, location and temperature and air pressure in real-time.
  • Real-time Temperature & Humidity Data: Cargo prevention from external damage from far away locations is possible. Tracking the real-time temperature and humidity inside the containers is effortless now.
  • It Has Both the Satellite and Cellular Connectivity: Tracking cargo en route through intelligent IoT solutions is possible. Depending on the availability of the connectivity options, the best is chosen. That option ensures hassle-free connectivity between devices and users.
  • Digitized Contracts and Automation: Paper documentation is prone to damage and courier charges as well. But through IoT intelligence, one can create contracts such as an electronic bill of lading (BoL) within the web/mobile app only.
  • Cargo Location Tracking: In order to trace any form of theft and breach in the contract, real time geo- location tracking of the cargo is crucial. The access to the crucial information related to the cargo lies with the admin.
  • Geofencing: It is crucial for the buyer to be aware of the cargo delivery time.

Through this feature, the cargo arrival time at the delivery address gets clear. No delays. No confusion. This enables the admin to Geofence on the map at the time of contract creation. Trust the fact that it is very useful.

On a concluding note

With a bountiful of benefits through smart contracts, every business involved in road shipping must adopt this solution. Smooth execution of business operations contributes to better brand building. So why to take up unnecessary stress that only eats up time, money, human energy, resources, and expectations. Modern-day businesses require modern solutions to fight market competition. Thus, to be strong at every stage of this phase, it is crucial for businesses to follow a digitized version of a contract. Why? It generates better professionalism, stronger security and clearer regulations set for the consignor and the consignee.

Smart Contracts – Deposit Photos

Sanjeev Verma

Sanjeev Verma

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