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How do IoT and blockchain for traceability simplify compliance?

Organizations can use IoT sensors and blockchain to confirm their traceability systems meet compliance requirements and get through customs efficiently.

One of the challenges of implementing traceability systems is compliance, but organizations can simplify the compliance process with blockchain for traceability.

The World Health Organization's working document QAS/04.068 on good distribution practices applies to all involved in the distribution of pharmaceutical goods, including manufacturers, suppliers, distributors, brokers, processors, wholesalers, traders and transport operators. The document provides a template for best practices in each activity in the distribution of pharmaceutical products. It also tasks all organizations with implementing strong manufacturing storage and distribution practices.

IoT is an increasingly common technology for the pharmaceutical industry to trace and track the pharmaceutical goods in a supply chain. In Europe, pharmaceutical organizations must address compliance issues more vigorously than ever before because of the E.U.'s Falsified Medicines Directive to prevent falsified medicines from entering legal supply chains in European markets.

Organizations can use blockchain for traceability systems to stay in compliance. Blockchain offers a system of recording supply chain data that can be shared both securely and transparently with multiple parties, thus reducing administrative costs and time delays. In this way, border agents could inspect shipment data of an entire supply chain. Any efforts to tamper with the shipment would be detectable. Items in supply chains already have barcodes added to them, so it is not a giant leap to enter items after they are manufactured into a global blockchain for IoT tracking. Exporters can upload documentation onto a customs office blockchain to show that they abide with national import rules, such as sanitary and phytosanitary rules. Blockchain provides secure tracking for agents to determine the exact location of goods, consignment contents and payable tariffs. Blockchain for traceability could contribute to overcoming the customs problem, however instances of successful implementations remain few to date.

Paper-based systems are increasingly not fit for tracking. Blockchain's immutable resilient records, secure attribution at the time of creation and the ability to employ smart contracts can provide a customs border trade oversight efficiently and more transparently. Information on goods -- such as clearance certificates, origin, proof of purchase or a bill of lading -- can be made part of an accessible block for suppliers, transporters, buyers, regulators and auditors. The increased transparency of using blockchain for traceability leads to lower transaction, auditing and accounting costs. The European Union's trust-based authorized economic operator system gives exporters with a proven track record faster customs clearance. Blockchain could provide the structure for authorized economic operator systems more efficiently and can lead to savings, such as a change in tariffs when the destination of goods change. Blockchain records the updates, making prepay maximal tariffs no longer necessary and smart contracts automatically calculate new tariffs.

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