Technology is transforming every aspect of our lives. From how we communicate to the way we shop, digitalisation is making everything quicker, easier and – all in all – more efficient. And the supply chain is no different, making it essential for businesses to keep up.
One of the biggest potential shifts for the supply chain comes in the form of blockchain. You might have heard of it as the technology behind Bitcoin. But what exactly is it? And how could it affect the way we do business?
Read on as we look at blockchain’s potential within logistics.
Put simply, Blockchain is a way of storing data digitally, which makes it tamper-resistant and completely transparent to all users. Rather than storing all data together, it is stored in blocks, which are linked back to their precursor by a cryptographic hash – essentially a ‘digital fingerprint’.
Each block contains a timestamp and transactional data – so every time something is changed, a new block is created. And these blocks are held in multiple copies across different computers – nodes in the blockchain network – making it practically impossible to modify data. To do so, you would need to somehow change every copy of every block simultaneously.
The benefits of blockchain technology
Understandably, this technology has a number of benefits:
- Transparency – Any data changes can be viewed by all involved parties
- Protection – Data can’t be changed retroactively
- Security – Because data is held in multiple copies, the database isn’t reliant on any one node
- Independence – Each transaction is authorised and evidenced by the blockchain itself, meaning there is no need for external authority, mediation or ‘middle men’
These advantages make it ideal for any process that requires data to be recorded and verified. It ensures parties are fully accountable, with fully transparent data. And this makes it potentially disruptive for all kinds of industries – from finance to marketing and, yes, even logistics.
So, what does blockchain mean for logistics?
Quite simply, a secure, tamper-resistant database enables full accountability and transparency throughout the supply chain – from sourcing to delivery:
- Linking physical products to identification tags like bar codes or serial numbers
- Verifying certifications for products – such as fair trade, organic or CE marking
- Recording the transfer of pallets or containers as they move to different handlers
- Tracking orders, shipment notifications, invoices and receipts
Not only could this ensure that retailers are sure of product source, current location and ethics of manufacturing, but it could mean more options and visibility for the customer. This provides enhanced traceability, making it much simpler to identify any errors and settle any claims. In the long run, it will also work as a more scalable model, allowing seamless integration of more participants and points in the network.
What’s stopping us?
With all these benefits, it seems like blockchain is the way forward for businesses. So, why are we not all on board already?
According to the 2018 3PL study, the majority of shippers and third-party logistics providers simply don’t know enough about it. While they see potential applications in the future, they’re not yet planning to implement the technology into their supply chain.
To some degree, these companies are right to be cautious. There must be an established infrastructure with the right technology implemented to ensure blockchain’s availability. On top of this, education is critical. Understanding the components and the implications of blockchain will ensure that it doesn’t remain an ideal of the future, but gets implemented efficiently.
The next step
As experienced logistics consultants, we know that a transparent, optimised and honest supply chain is better for customers. Optimised supply chains aligned to business strategy make a major contribution towards competitive advantage, customer experience and the bottom line.
With more accountability, we can have more open discussions about the direction and flexibility of your supply chain. Ultimately, this allows us to create a forward-thinking business with processes that ensure competitiveness and sustainable industry growth.
If you’re looking to optimise your supply chain, feel free to speak to our team about the different options available to your business – and how best to implement them