A turning point for logistics and supply chain management

Blockchain has come a long way since its advent in 2009. Today it is lauded as the “fifth evolution” of digital computing. Basically, it is an innovative way to manage a distributed database. Ingenuity comes from integrating old technology in a new way.

What are the ramifications of blockchain for the logistics and supply chain management sectors?

The technology’s ability to record exchanges between parties in a permanent, secure, and tamper-proof manner has a number of profound benefits.

A single integrated data source, the increased transparency provided with end-to-end monitoring gives parties the ability to track, trace and verify high-value assets in the supply chain and counterfeit products.

Cryptographic cryptography via blockchain offers a viable solution to improve IoT security. However, players in the logistics industry are still at the beginning of their journey to unlock the true benefits that blockchain technologies promise.

Listed below are some ways blockchain will revolutionize logistics and supply chain management globally:

Smart contracts

Several actors are involved in a given supply chain, which means there are many contracts, payments, tracking and communications. As supply chains are becoming more and more complex, smart contracts are autonomous systems that can streamline processes through self-executed manual processes traditionally accompanied by legal contracts.

Once the smart contracts have been put in place, it will automatically apply the terms and conditions agreed upon by the interested parties. If these conditions are met, the previously agreed actions take place automatically. Smart contracts reduce administrative costs and increase efficiency by reducing the processing time of goods at checkpoints. You can think of it as the software code that replaces “human blockchains”.

Transparency of data

While there has been a wave of digitalization across industries, logistics and supply chain management can be very heavy in many areas.

Blockchain technology ensures that documents are tamper-proof, accurate, and from a verifiable source. In this way, each stakeholder gets access to a shared dataset which prevents the situation where there are multiple copies of the same record kept by different parties.

By establishing a single source of information, discrepancies in records and vulnerability to tampering can be significantly reduced.

Safety

The decentralized nature of blockchains means that a disruption in the entire supply chain is less likely to occur due to a localized attack or failure. This is because each component will have its own voice in the blockchain which can be tracked over time.

Authorized users could update the status of a component in real time. Smart contracts also help ensure quality as stakeholders would be able to trace every component of a product from origin to destination.

Efficiency

A key challenge in supply chain management is limited visibility between processes. This problem arises when actors in this sector lack information along the entire supply chain to make strategic decisions regarding their isolated role in the ecosystem.

Blockchain technology is a solution that seeks to integrate all players on a common platform and thus improve efficiency in decision making.

According to Ginni Rommety (executive chairman of IBM), using blockchain in the global supply chain alone could lead to more than $ 100 billion in efficiency.

Over the next few years, the logistics and supply chain management sectors are likely to adopt blockchain and its applications across a number of processes. But it is important to note that to realize these benefits, the isolated software systems currently in use must be combined with an industry standard. This will enable a continuous flow of information in a secure and compliant manner.

Ultimately, blockchain will offer a scalable solution for players in these industries to maintain high performance in the near future.