The Inevitable Merge of Supply Chain and Blockchain
Separately Written by Randall Mardus and Leah Barrier
How is blockchain good for the supply chain industry and is it right for my business?
If you work in the supply chain and logistics field you are likely familiar with the industry’s shortcomings; how inefficient it is at keeping track of shipments from one carrier to the next; how many independent carriers there are and how difficult it is to keep track of who is who and where your shipment is at any given time; how much paper the industry still uses to keep track of transactions; and what a pain it is to get and record permissions from one government entity to the next.
These issues have high costs. Namely, they cause delays, they open the door to confusion between carriers and clients, and they cost money. They also inhibit change as people and organizations get accustomed to the dysfunction and refuse technological advancement of any kind.
According to the DHL/Accenture report, "today there is a significant amount of trapped value in logistics, largely stemming from the fragmented and competitive nature of the logistics industry. For example, in the US alone, it is estimated that there are over 500,000 individual trucking companies. With such a huge number of stakeholders involved in the supply chain, this often creates low transparency, unstandardized processes, data silos and diverse levels of technology adoption.”
The DHL/Accenture report also notes that, "Many parts of the logistics value chain are also bound to manual processes mandated by regulatory authorities. For example, companies must oftentimes rely on manual data entry and paper-based documentation to adhere to customs processes. All this makes it difficult to track the provenance of goods and the status of shipments as they move along the supply chain, causing friction in global trade.” This is to say nothing about human error and the time it takes someone to record this information by hand, never mind the cost of paper and notebooks on which to record it.
In light of these industry-wide issues, the DHL report argues that, “[the] Blockchain can potentially help to overcome these frictions in logistics and realize substantial gains in logistics process efficiency. This technology can also enable data transparency and access among relevant supply chain stakeholders, creating a single source of truth. In addition, the trust that is required between stakeholders to share information is enhanced by the intrinsic security mechanisms of blockchain technology. Furthermore, blockchain can achieve cost savings by powering leaner, more automated, and error-free processes. As well as adding visibility and predictability to logistics operations, it can accelerate the physical flow of goods. Provenance tracking of goods can enable responsible and sustainable supply chains at scale and help to tackle product counterfeiting. Additionally, blockchain-based solutions offer potential for new logistics services and more innovative business models.”
Microsoft has developed a blockchain-based accounting program for air cargo with the intent of streamlining operational efficiencies along with comprehensive billing transparency updated in real-time via blockchain, minimizing discrepancies and accounting errors, while maximizing visibility and accessibility.
The flexibility designed within the system allows for the logistics company utilizing the application to adapt the structure accordingly based on new client on-boarding processes or the adverse, essentially creating a natural ebb and flow continuously adjusting for growth and scalability.
Freight trends as of late have been compounding upward towards advanced technology and wide-range digitalization. Technological advancements are showing no signs of slowing which elicits an abrupt “get on board, or get left behind” mentality to the freight forwarding industry in its entirety - streamlined efficiency, heightened visibility and transparency, and quicker end-to-end shipments with matriculated precision.
Perhaps the next steps begin with comprehensive blockchain implementation. Blockchain has been a topic up for discussion in the air freight industry for well over a year now, and has shown progressive indication of operational system integration, all while investors continue the search for an un-hackable ledgering system.
Do you have questions about your current supply chain and how technology can be integrated for a more efficient process? Reach out to us today for a free consultation.