Following our introductory article on blockchain technology, we delve into a more detailed look at the impact it will have on the logistics industry. The media loves to call blockchain a disruptor that will change the way we do everything. And the logistics and supply chain management community is now realizing how far reaching its benefits can be. So what are some examples of some of its applications?
- Reduced paperwork. International container transports have a long trail of paperwork associated with them. For example, shipping goods from East Africa to Europe requires stamps and approvals from around 30 people and organizations who will be in touch on over 200 occasions. Also, documents such as a bill of lading might be subjected to fraud. The costs of paperwork falls between 15 and 50 percent of the costs of the physical transport itself. Through blockchain solutions, supply chain companies will be able to digitize trade records. Imagine being able to connect shippers, ports and customs across a global network to include every minute document or approval. According to consultants at ILC, Panama, IT systems will be “enhanced so that users will have full access to information on containers.”
- Rule out counterfeit products. As ILC handles all stages of the supply chain, a massive benefit of blockchain is that it will become more difficult to tamper with products at any point, from sourcing to delivery. It is particularly appealing in a sector such as ILC’s integrative healthcare solutions where the company oversees supply of medicines up to the point of delivery to an individual patient. According to Daniel Abrego, CEO of ILC, “Blockchain would rule out counterfeit drugs in the medical sector. The consequences of a patient receiving wrong medication are serious and life threatening. But we can avoid this with accurate and up to date technology. Patient safety would be greatly improved through transparency. And patients themselves can check the barcodes on their wrists to ensure they are receiving the right drugs.”
- Origin tracking becomes easy. For a retailer facing foodborne disease outbreak, it can currently take weeks to locate the source of the contamination, not to mention restoring public confidence in food safety. Such incidents require updated ledgers, information from farms and factories including an animal’s date of birth and use of antibiotics, vaccinations and even location. Along with expiration dates, batch numbers, factory and processing data, and shipping details, users of a blockchain will receive instant answers to find the origin of bad produce. And using data that is constantly updating itself, retailers can also reduce food waste by measuring shelf life.
- The Internet of Things. Have you read our article on the Internet of Things (IoT)? Combining IoT with blockchain means improving logistics efficiencies and optimizing warehousing. Walmart has been pioneering in this area and is aiming to improve last mile logistics through connecting delivery drones to blockchain. For example, these drones could operate with a digital currency and this would facilitate seamless payments, through smart contracts, for the best air corridors. Other benefits from combining these two mega trends would be improving security and access, more data that can be leveraged to improve the supply chain, all with minimal or no human oversight.
- Smart contracts. Take for example, a parcel delivery. A smart contract can be designed so that the payment is only released once the shipping company confirms the delivery. The transaction is automated, but also documented and the code is controlled.
Blockchain is a decentralized, open source network which will be challenging to grasp in the beginning. There is yet a lot to be proved added to a great deal of speculation about where changes will lead. But acceptance is growing widely and various sectors are enthusiastically embracing the possibilities.