“Blockchain” has been heralded as the next big thing to revolutionize the logistics industry by thought leaders and publications over the past year. While many have heard and perhaps discussed the latest buzzword, few know the actual history and definition behind it. From tracking inventory to managing payment and audits, blockchain technology could offer supply chains greater efficiency and transparency than ever before.
1. What is blockchain?
Blockchain is a technology that executes and enables a digital ledger concept1 – and it’s certainly not a brand-new concept. Its origin dates back to 20082 with the launch of the cryptocurrency, Bitcoin, and was designed to enable digital information to be distributed, but not copied, for a more secure, incorruptible digital ledger. This robust technology can be programmed not just to track and protect the integrity of financial transactions, but anything that holds value – including any type of goods that move through a supply chain. Essentially, it helps guarantee the validity of a transaction through impenetrable digital record-keeping.3 Because the data is embedded within a network as a whole, every single step is available to those participating within the transaction.4
2. How does it relate to supply chain?
Shippers and logistics providers that implement blockchain technology could be introduced to opportunities across the supply chain for greater security, efficiency, and transparency – as well as potential cost-savings. Every time a product changes hands, the transaction can be documented to create a permanent history of a product – from manufacture to sale. Aside from creating visibility and trust between shippers and customers (and anyone involved within the transaction), this could dramatically reduce time delays, additional costs, and human error.5 Although its potential can be applied to endless possibilities, blockchain could help improve areas including the following:
- Recording the quantity and transfer of assets, such as trailers, containers, and pallets as they move throughout the chain
- Tracking any trade-related documents, such as purchase orders, receipts, change orders, and shipment notifications
- Assigning certifications to products, for example, verifying whether a food product is organic or fair trade
- Sharing information with suppliers and vendors such as manufacturing process, assembly, and delivery for full transparency6
3. What are the benefits of blockchain in logistics?
While blockchain is still very much in its infancy state, companies can begin to understand the benefits and potential that the technology holds. Blockchain could offer shippers a variety of advantages, including:
Increased transparency and trust: Blockchain offers the ability to document a product’s journey across the supply chain, enabling greater transparency and traceability than ever before.7
Enhanced security and decentralization: There is no single organization that controls blockchain technology; it is updated through the consensus of participants. Further, blockchain is designed in such a way that it’s virtually impossible to penetrate, therefore reducing or eliminating fraud and errors.8
Advanced innovation: As the industry learns more about the technology and continue to put it to use, opportunities are limitless to create new ways to create more transparent, seamless solutions within the supply chain realm. Blockchain can also help reduce delays from paperwork, identify potential issues faster, and improve inventory management – therefore saving money.9
Greater scalability: Blockchain makes it possible to record as many touchpoints as possible and can include an unlimited number of participants.10
Blockchain is technology that is still maturing and companies are still figuring out exactly where to start to help benefit their customers. Many shippers are looking to leverage innovations like blockchain to strengthen their overall supply chain, as well as increase their bottom line. It’s important to partner with progressive 3PL that can work cohesively with their customers to navigate new technologies for further innovation, transparency, and efficiency. While blockchain alone won’t be able to tackle every challenge within a supply chain, especially while it is still being developed to fit logistics networks, it can contribute to securing transactions, providing further traceability, and limiting errors.11