Does the current era of optimized buying experiences, where 10-minute home delivery is a reality, really have a dire need for further optimization of supply chain management?
Yes, we do. And here’s why!
Supply chain management is a sector that traditionally exists in data silos, has low visibility among stakeholders, and operates with different levels of technology adoption.
Do you remember the infamous “EVER GIVEN’ ship that got stuck in the Suez Canal for six days? What you might not know is that it cost over $400 million per hour to the economy.
The real scale of the transportation and logistics industry is far beyond the end user’s comprehension. Every single day, millions of tons of cargo are shipped from one end of the world to another. This requires seamless coordination between multiple stakeholders, the application of modern IoT-based devices, transparency across all layers of management, and real-time visualization of all interlinked processes.
Or in short, all the use cases of Blockchain Technology.
What is Blockchain Technology?
Blockchain is a distributed database or a network of decentralized peer-to-peer shared nodes spread across their computer networks. It stores data in a digital format that is immutable (can’t be changed), highly secure, and transparent so that anyone can access information without any third-party involvement.
Let’s understand how blockchain technology can unlock opportunities for improvement in the trucking industry.
4 Revolutionary Impacts of Blockchain in the Transportation and Logistic Industry
Supply Chain Visibility
Using blockchain technology provides different stakeholders with a single source of truth, right from the packing of any product to its distribution to the end users. Blockchain can make it easier for goods and commodities to be tracked in a transparent way. It is possible with IoT tracking technology, where the installation of smart digital devices on the vehicles can collect and deliver data with the help of blockchain.
Companies can check the live tracking details of the vehicles and products and ensure quality and safety until they reach their destination. They can also identify defective products, track quantity, validate maintenance of vehicles, and record pickups and deliveries, which can improve the overall management chain through high-end performance monitoring. Companies like Maersk and IBM use the tech to help suppliers get notified with real-time shipment updates enhancing supply chain visibility for stakeholders.
Advanced Security
According to CargoNet’s report, $45 million worth of cargo scams took place last year. Clearly, the logistics industry is in dire need of a complete technical revamp with enhanced security capabilities.
And that’s where Blockchain technology comes into the picture.
Whether it is payment transactions, documentation, or identification, a blockchain network can securely validate it all. In the blockchain network, the management of the industry can add respective participants to the network and input their required information, like an original government-approved photo. Every staff member has to validate their identity digitally.
Outside individuals cannot access the direct entry or the physical on-field process and execute the fraud. Also, since every blockchain network is immutable, nobody can delete or interchange any type of programmed information on the blockchain.
Cost-effective Automation
On average, the freight industry takes up to 45 days to process payments. Not only that, companies follow a tedious paper-based approval and transfer procedures. This generates multiple in-between breaches for possible delays, paper losses, and fraud.
Smart contracts that work on blockchain technology can help resolve payment-related issues. For example, company owners and retailers can set certain mutual conditions for releasing payments once the shipper reaches the destination with the goods.
A smart contract is programmed in such a way that whenever pre-determined conditions that are set get fulfilled, the smart contract self-executes the payment transfer automatically. It eliminates numerous channels, and two parties can independently make rapid, automated payments at a lower cost. Blockchain provides consensus by design, where transactions are not contested and all parties have the same ledger version. Walmart Canada uses blockchain to eliminate incompatibility issues for invoicing, data collection, and payments.
Transparency
A significant concern in the supply chain sector is the involvement of long hectic processes, starting from manufacturing and pickups to delivery of those goods to the retailers and then customers.
Enabling blockchain technology in the logistics industry can introduce a new way of transparency in the business. But, due to competitive markets, companies fear disclosing their sensitive information and records involved in the growing business. That’s why there are certain processes that can be transparent, such as date, location, pricing, validation, and quality.
Let’s talk about the participants associated with the business. They can have absolute transparency of the availability of items, demand, in-process products, freight process, and financial and paperwork information. For instance, De Beers Group, the world’s leading diamond company, has deployed a blockchain platform named Tracr to provide an immutable record of a diamond’s provenance.
With such knowledge, they can maintain stability, decrease risk factors, accelerate or reduce workflow to fulfill the demand, and improve overall transportation and logistics management.
Conclusion
Achieving excellence in logistics is a key part of supply chain management to ease the complexity associated with global trade logistics such as procurement, transportation management, tracking and tracing, customs collaboration, and trade finance. Introducing blockchain technology can positively impact the sector’s current security and management and introduce new methods of handling data and tasks.