Blockchain, logistics and supply chain: overview of possibilities

We are just beginning to understand how blockchain can help protect and optimize various sectors. The sectors in which the blockchain can improve the logistics and supply chain are numerous: agribusiness, international trade, luxury goods, wines, pharmaceuticals, real estate and construction, aeronautics, automotive and so on.

Let's take a closer look at some areas that the blockchain can improve the logistics and supply chain:

Food

The case of the agri-food industry is today the most convincing to illustrate the & # 39; impact of the blockchain on the supply chain.

The cost of food fraud the supply chain is estimated at 40 billion dollars a year. In 2013, the horse meat fraud scandal again highlighted the shortcomings of the food traceability system across Europe. These cases are recurrent in the agri-food sector (as in the case of Chinese adulterated milk in 2008, etc.). And all indicate a lack of transparency in the logistics chains of the sector.

The blockchain, in a distributed, transparent form and the incorruptible register can help to combat the opacity of these supply chains and lead to a much faster diagnosis of the sources of contamination. Walmart's vice president of food safety states that technology could be the "holy grail" of the supply chain. Blockchain allows all the parties involved in a supply chain to write down each phase of the production process of a food product, from its production to its point of sale.

Depending on the case, registration in the register can be done manually by photographing the documents with a smartphone and putting them online on an ad hoc platform, or automatically – through the use of connected sensors, connected to the product, able to to automatically transmit data, such as position, temperature, humidity, etc., and record

Therefore, each stakeholder who has been granted permission to access this blockchain can check which participant has entered the information provided, on which date and at what time, etc. In other words, the blockchain allows for the timestamping and transparency of tracking food, without an individual or an entity modifying or erasing information unilaterally. The various actors in the industry can then detect in real time where and when the fault or fraud was committed.

Many experiments have been started for several months to record the course of different products (tuna, fish, mangoes, etc.). In France, Carrefour announced in February 2017 the future use of the blockchain for the transparency of its animal sectors. Walmart, testing the blockchain in China since 2016 for the traceability of pork, announced in June 2017 that its first results are "very encouraging". The blockchain has reduced from day to minute the time it takes to go back to the origin of the products, to react more quickly if contaminated products are discovered.

International shipping and trade

The implementation of a blockchain would greatly reduce fraud and errors, as well as transit times and current shipments. The stakes are high: 9 out of 10 goods shipped worldwide are shipped by sea, and the cost of processing and managing commercial documentation accounts for about a fifth of maritime transport costs.

Today, international freight transport needs to be inspected on average by nearly 30 organizations during its journey, which represents a significant cost.

In addition, the process is still largely based on paper and manual checks. If a paper document is missing at one stage of the process, for example at an intermediate point, it is an entire container (or more) that must remain in place. Transport may therefore be delayed for a few days; worse, sometimes it is necessary to discard the entire container because the storage conditions during waiting do not always allow good storage of goods.

For these reasons, the digitization of the international shipment via the blockchain could save up to 20% of its total

In concrete terms, the system would work as follows: when one of the actors in the supply chain signs an associated document to a given container, a digital version of the document would be created. A unique and encrypted fingerprint associated with this document would then be written on a blockchain accessible to all other stakeholders (note that it is also possible to directly store data on a private blockchain). In the event of a subsequent dispute, everyone could read the register again and make sure no one has changed it in the meantime.

The use of different sensors and NFC or RFID chips would facilitate the collection of data on the position of the load and its transport conditions, and write this data automatically on the blockchain used.

The luxury markets

Blockchain can also be an effective tool to fight fraud in the luxury goods sector. A startup-Everledger is using blockchain in the diamond industry. They have developed a digital register that lists diamond transactions, with the aim of making the diamond market more transparent, from mines to jewelers. With this system, the blockchain will eventually be an effective fraud deterrence system. Once the database is sufficiently developed, if a seller is unable to prove with cryptographic evidence that he has the legitimate rights to the diamond, the value of the jewel would decrease considerably.

Everledger lists 40 attributes (size, color, purity, carat weight, position of extraction, etc.) for the registration of each diamond, which constitute 40 metadata from which a unique serial number is created. This serial number is then microscopically engraved on the stone itself and added to the blockchain along with the 40 metadata.

Although paper certificates already exist that demonstrate the origin of diamonds, a blockchain is unalterable, continuously updated and accessible from anywhere in the world. Furthermore, the fact that the register is not in the hands of a single but distributed actor makes it easier to bring together several important players in the industry.

Pharmaceutical industry – drugs

The pharmaceutical supply chain is now plagued by many challenges of drug traceability and the fight against fraud. The World Health Organization (WHO) estimates that over 10% of drugs circulating in developing countries are counterfeit drugs, causing tens of thousands of unnecessary deaths.

The use of a blockchain could help combat this scourge by recording the fingerprints of each step in the chain of production and distribution of a drug. All the actors in the pharmaceutical supply chain, as well as the patients, could therefore directly control the origin and the integrity of the drugs.

The blockchain is often confused and confused with Bitcoin or cryptocurrency in general. It is also generally marketed and perceived as a sort of magical solution that will solve every problem. None of these is true, but the reality is that there are some valid scenarios in which blockchain can be useful, for example reducing fraud and increasing transparency and security of logistics and supply chains.

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