The complex nature of today’s supply chain in conjunction with heightened expectations of customers has made logistics and transportation operations more difficult. Logistics companies are turning to technology to share information across a complex network in a secure way. As logistics evolves, there will be a greater reliance on blockchain technology to keep shipments secure.
What is Blockchain Technology?
Blockchain is a distributed ledger that stores immutable data that is shared by network members meaning that once data is recorded, it cannot be changed. In transportation, a shipper is able to use blockchain to record transactions throughout the supply chain. It is a public and distributed ledger for reducing errors by providing companies with visibility to data for tracking shipments.
Since supply chains have grown in size, location and in involved parties, this technology can be used to address cyber-attacks, inefficient activities, and cyber-attacks throughout the shipping life cycle. Because blockchain is immutable, it is difficult to target information that has been encrypted through the use of blockchain ensuring that every transaction is safe.
The Growing Need for Blockchain in the Logistics Industry
The growing need for secure information as supply chains become more complex has led many logistics companies to adopt blockchain. Companies from equipment manufacturers to airfreight carriers are all recognizing the need for the safe transmission of information. Leading companies such as UPS, Penske, and Salesforce created the Blockchain in Transport Alliance (BiTA), which now has over 500 members in 25 countries. The goal of this alliance is to drive the use of blockchain technology and help the industry build blockchain applications. This indicates the importance of blockchain within the industry as well as the trend to digitize the logistics industry.
Why Your Company Needs to Use Blockchain
No matter the type of logistics company, the advantages of investing in this technology give a significant ROI.
Transparent Shipping
One of the biggest advantages of blockchain technology in logistics is transparency. The complexity of the transportation process now includes many partners and suppliers. The value of blockchain is that it makes the exchange of information easy and secure. Blockchain technology allows all parties to have the same access to data at the same time.
Blockchain provides an unchangeable record of all shipping transactions which increases the visibility in the supply chain. Companies can use blockchain to track a product throughout its cycle, ensuring that the correct product is shipped and received. For example, for cold chain shipping sensors can report back the temperature of the goods to ensure they are kept at certain temperatures throughout the shipping journey. Real-time tracking enables companies to schedule delivery times and use assets effectively.
Because products can be tracked in real time and stored in a secure ledger viewable by all parties, administrative processes can also be reduced.
Smart Contracts
Paperwork can be eliminated with the implementation of smart contracts, which automatically execute an action based on a set of rules. This feature simplifies contracts between supply chain members and can be used to:
- Automate delivery times and receipt of goods into inventory
- Send alerts about held inventory expiring or hitting a strike price.
- Automate payments for inventory
- Pay credits for failure to meet Service Level Agreement (SLA)
- Record product transfers throughout the supply chain from manufacturer to consumer
- Coordinate trade deals by connecting importers and exporters to reduce paperwork and quality assurance.
In addition to the elimination of paperwork, smart contracts keep all documentation, included any changes to the contract in one place for easy access by all parties.
Warehouse Improvements
The increased demand for warehousing has also created additional challenges of tracking and managing the warehouse. Blockchain allows companies to act on a proactive basis so that companies only replenish inventory when stock funs low or predictive models forecast the need to order more inventory. Products can be located in the warehouse and manufacturers can see the end user demand in real time, which enables better management of planning and inventory replenishment. While warehouses can still use minimum stock levels or predictive models, blockchain makes the determinations more accurate.
Elimination of Manual Processes
Warehouse and transportation execution is often times a manual process which is time consuming. While companies are slowing phasing out manual process for technology and automation advances, warehouses can enhance their output with the implementation of blockchain. This technology improves the stocking, picking and packing, and replenishment processes because of digitalized records and smart contracts. This adds to the bottom line as an organization becomes more efficient.
Verizeal for Blockchain Technology
Due to increasing costs of shipping and managing inventory, tools that reduce logistics and warehousing costs, like blockchain technology, are appealing to logistics managers. Blockchain can address the issues that companies face in the warehouse and when shipping by streamlining the supply chain and improving inventory management. Verizeal’s platform utilizes blockchain enhancements on an enterprise-grade platform to ensure comprehensive privacy controls. All transactions are protected by public-key cryptography which ensures a secure exchange every time.
