Supply chains today are complicated and continually changing with each technological advancement. Logistics is usually one of the most inefficient links in the process because of the countless variables that can affect transit time, prices and availability. However, there is a possibility that blockchain technology can reshape the logistics industry.
The blockchain is currently used primarily to verify transactions. However, within digital currencies, it’s possible to digitize, code and insert practically any document into the blockchain. Doing so creates an indelible record, the authenticity of which can be verified by everyone involved.
Who’s Already Using Blockchain Technology in Their Supply Chains?
Some larger corporations have already implemented blockchain technology into their supply chains for practical use. Whether a business is selling food or offering free website themes, it’s important to have accurate records to trace each product back to its source.
According to Forbes, Walmart uses blockchain to keep track of the pork it sources from China. The blockchain records where each piece of meat comes from, where it is processed, where it’s stored and its expiration date. BHP Billiton, the world’s largest mining firm, announced it will use blockchain to better track and record data throughout the mining process with its vendors. Not only will it increase efficiency internally, but it’ll allow the company to have more effective communication with its partners.
What’s Wrong With Logistics Today?
There are a lot of issues within the logistics portion of a company’s supply chain that can result in loss of time, money and possibly even customers. Mother nature sometimes plays a part in late deliveries or increased transit time, but even in perfect conditions, product transportation is an imperfect science. A new mandate enforcing electronic log devices to track a driver’s hours on the road have complicated things even more. Transit times have increased on longer shipments because of the mandate, causing companies to shake up their logistics strategy.
The pushback on this mandate has even caused some trucking companies to close their doors, making availability tighter, which has driven transportation prices higher than they’ve been in recent memory. If a company is using a third-party logistics company to handle their transportation, then the prices could be even higher. These brokerages are feeling the squeeze of equipment availability and they are tacking on higher margins to compensate for their extra work. So on top of higher truck rates, the brokerage fees are likely higher as well.
How Blockchain Can Help The Logistics Industry
Blockchain technology is generally used in cryptocurrencies because of the transparency it provides. When applying this to the logistics industry, it will improve accountability, effective tracking and transparency.
According to CoinTelegraph, shipping anything is a sequence of custody handovers. Having an indisputable record of the chain of custody makes it impossible to lose track of who is responsible for a product during each handover. Blockchain technology combines chain of custody control with the transparency of absolute record-keeping. This ecosystem deters malicious actors, as they will eventually become known due to system transparency.
The technology also weeds out unethical employees who try to change past events to gain some sort of advantage or erase mistakes. According to Eye For Transport, an employee that goes into the system to change past events will alter the coding of the event. However, the altered coding is obvious so it would be impossible to disguise change. This will allow companies to recognize fraud and determine who initiated the change almost immediately.
Logistics is a growing industry that’s requiring more resources within a company’s supply chain. As blockchain technology continues to grow, companies who can implement blockchain into their logistics strategy can immediately see improvements in their tracking, transparency, and security.