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Even as technology spreads within supply chains, logistics operations continue to be fraught with visibility issues. This problem stems from logistics stakeholders struggling to trust their partners both up and down the value chain, jeopardizing data interconnectivity and the resulting increase in efficiency.
Blockchain as a technology can be a powerful tool for instilling trust in a value chain, especially in situations that require transactions to be made based on data from different network stakeholders. FreightWaves spoke to executives from Data Gumbo, a blockchain-based smart contract platform, to understand how blockchain can be leveraged in the logistics industry to ensure seamless transactions.
“At Data Gumbo, we automate the execution of contracts between buyers and sellers by using a combination of data held by those parties and other third parties to confirm that such transactions have occurred. Our platform then automatically calculates the appropriate payments and re-enters that information in a pre-reconcilable manner into the party registration systems, whether SAP, Oracle or QuickBooks, ”said William Fox, Data Gumbo’s chief product officer.
Data Gumbo operates in the oil and gas logistics space, where it helps build confidence in the transactions incurred for the trucking of produced water that is transported from oil wells to disposal facilities. Fox explained that the company has often heard from trucking companies complaining about late payments, as the normal 30-day payment terms are extended to over 45 days due to disputed and kicked invoices before they are paid.
A blockchain network serves to eliminate such disputes, while also reducing the huge physical paper documentation which results in reduced operating costs. “The savings can be seen in other ways. For example, in the context of diesel, there are 3-6 cents per gallon of costs saved on our platform. Getting paid on time reduces the interest charged on your customer’s loan, which doesn’t pay fast enough, and less administration software, middleware, and subscription that have to be paid out of your pocket, ”Fox said.
To enable such transactions across the blockchain network, it is crucial that the data entering the system is standardized along the value chain. Since it is not possible to ask all stakeholders in the trucking supply chain to comply with data standards, Data Gumbo seeks to bridge the gap by acting as a standardized aggregator.
“We use standards where they are available. But let’s map our data to a standard model within our system. In essence, we are not trying to achieve industry standardization, but to use our internal model to map data, “said Andrew Bruce, CEO of Data Gumbo.” This relieves companies of the burden of standardizing while accessing the data. network.”
Data Gumbo’s quest to create reliable transactions without interruption is focused on ensuring that the data it uses is reliable and with minimal margin for error. Within the blockchain consortium, the margin of error is limited to 1.6% for transactions to remain automated between two parties, with a greater margin of error in transactions that require manual intervention before approval.
“In this way, companies become very interested in the data. This is because there is a strong incentive to make sure the data quality is high and that the data is accurate, ”said Bruce.
Data Gumbo recently partnered with the Texas Alliance of Energy Producers to deploy its interconnected blockchain network to its members, fueling smart contracts that help stakeholders reduce operational costs and increase efficiency in business transactions. By ensuring a reliable environment for data sharing, Data Gumbo has enabled energy producers to acquire value and mitigate risk through better and informed decisions.
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