The supply chain in logistics only seems simple at first glance: what could be easier than getting something from point A to point B? There may be dozens of other points between A and B, each connected to a new company, people, and documents. The complexity of today’s supply chains leads to delays, losses, damages, and opportunities for fraud. Not surprisingly, this industry needs a technological transformation involving intrintroducingive digital technologies like blockchain.
What is blockchain technology in supply chain management?
Blockchain technology is mainly related to cryptocurrencies. However, its principles can be helpful in various industries, including supply chain management.
In general, a blockchain is a decentralized network (chain) of blocks that allows transactions to be made, recorded, and secured between multiple parties involved without the need for an intermediary such as a bank. Each new block is linked to the previous one, so it is impossible to change one block without changing the entire chain without the approval of everyone in the network. Cryptocurrencies such as bitcoin, litecoin, and Ethereum are the main currency for transactions.
In supply chain management, instead of crypto coins, supply chain blockchains “tokenize” data associated with transactions, creating unique and easily verifiable tokens for purchase orders, inventory, invoices, etc.
Each participant in the chain has a unique digital signature. It is used to “sign” the tokens that move along the chain. Each transaction step is captured in transfers between participants, providing a built-in checkmark that cannot be falsified as everyone gets their copy of the chain.
What are the benefits of blockchain in supply chain management?
The use of blockchain in supply chain management can increase the security, transparency, and reliability of the supply chain and can also help automate processes while reducing costs and risks.
This allows members to record prices, dates, locations, quality, certifications, and other important information for more productive supply chain management. Blockchain technology can improve supply chain traceability, reduce counterfeit and gray market losses, increase transparency and efficiency, and improve overall supply chain management.
Thus, blockchain in supply chain management can provide traceability, transparency, and traceability benefits.
Security and transparency
Since the information in each blockchain node cannot be lost, changed, or erased if someone wants it, it becomes a reliable way to store data. Unlike storing data on servers, a blockchain-enabled database is hack-resistant because all information is open and stored on multiple machines.
All shippers and carriers, as well as other participants in the supply chain, see the details of each shipment: its route, speed, documents, and any changes made (when, why, and by whom). This increases trust between different companies that have to work together within the same supply chain. Combining blockchain with IoT technologies also eliminates or at least reduces the possibility of smuggling prohibited or dangerous items. Here’s how it works: A truck or ship’s intelligent sensors can weigh and analyze the cargo and send the information to the network.
Reliability of information
The transparency blockchain brings to the global trading industry goes beyond documentation and administrative procedures. It also displays information about the products and their origins to ensure dealers and customers that the products are not spoofed on the way to the shelves or made using illegal child labor. A blockchain-based system can confirm the exclusivity and natural origin of luxury items most likely to be counterfeited.
Proof of proper production becomes even more critical regarding medicines or food. Blockchain makes it easy to determine who is responsible for tainted food or a disease outbreak. Imagine a large retailer importing eggs and chicken from multiple households. Suddenly, consumers report that they contracted salmonellosis after eating eggs purchased from this vendor. Instead of destroying the entire stock, you can find the exact suppliers of contaminated products and eliminate their last addition.
Another way the logistics industry can take advantage of the easily accessible, trusted information provided by blockchain technology is by seeing the history of a vehicle and its performance. For example, when a company needs to buy used trucks, it can get a record of all breakdowns, repairs, and accidents on a particular vehicle.
Smart contracts are one of the most revolutionary effects blockchain has on the supply chain industry. These are sets of actions that are performed after specific requirements are met. For example, a program could send money to a carrier as soon as the shipment arrives at its final destination. Such a solution helps eliminate the need for third-party companies such as banks to speed up and automate processes that typically take longer and can cause human error.
Long and tedious attempts to smooth out conflict situations are a severe problem for most players in the logistics industry. Many companies spend millions of dollars to resolve payment conflicts instead of investing in business development. In most disputes, companies need outside help to reach an agreement. With blockchain, supply chain management can save time and resources by facilitating dispute resolution.
The introduction of blockchain into the supply chain also makes it easy to find suitable routes and empty spaces in vehicles. According to the American Institute for Transportation Research, 20% of trucks are open for all distances. This means a loss in industry revenue, which can be avoided through better communication and automation of obtaining information about truck loading.
Examples of using blockchain in other industries
Finance and international payments
The use of blockchain technology for cross-border transfers is one of the most illustrative examples of the application of this technology. The active development, implementation, and successful use of payment networks and protocols such as Stellar, Ripple, and IBM Blockchain World Wire shows how well blockchain fits into the financial industry.
Blockchain platforms allow international transactions to be carried out almost instantly and with low commissions due to the absence of the need for participants to contact any intermediaries, such as banks.
Banks and other financial institutions can also increase the efficiency of their internal work by moving to decentralized systems within the bank between its various divisions and independent counterparties, as this will help speed up payments and increase trust between participants. In addition, blockchain systems of this kind can be used not only for external or internal transactions but also as part of a reliable workflow.
Billing and payment automation
Blockchain-based solutions allow the implementation of intelligent contacts with various scenarios that will enable you to automate the issuance and payment of invoices when specified conditions occur.
IBM has developed a web. The trade blockchain platform allows you to:
- create trade orders
- manage all stages of the trading process,
- establish the terms of calculation and payment,
- manage banking products.
The platform is fully automated, which significantly speeds up the entire process from order to payment.
Blockchain technology has opened up a vast niche of cryptocurrency exchanges – digital platforms for buying, selling, exchanging, and storing cryptocurrencies. Compared to traditional businesses, crypto exchanges feature lower entry levels, high transaction processing speed, and relatively low fees. The most popular crypto exchanges include Binance, Coinbase, OKEx, Huobi, and others.
Blockchain technology also made it possible to develop investment platforms that allow users to invest in cryptocurrencies and various tokenized assets. Using cryptocurrencies or bank cards, users can replenish the wallet of the RoobeeWallet platform and purchase tokenized assets, which will also be stored on this wallet.
Blockchain features such as ensuring the immutability of information, making it possible to trace data changes and their safety, make this technology suitable for storing, managing, and exchanging patients’ electronic medical records.
The Advice platform uses the Stellar protocol and artificial intelligence to collect patient medical data and analyze it to determine the most effective service delivery methods.
Also, blockchain solutions can be used to store and analyze research data. IBM is working on the MiPasa project, which helps fight the COVID-19 coronavirus. The answer is designed to collect medical, scientific, and research data from various sources, synchronize them and identify shortcomings and differences to create a single knowledge base for all participants.
The production and distribution of counterfeit medicines are one of the biggest public health problems. Introducing blockchain solutions in the supply chain will significantly reduce the risks associated with drug fraud.
Chinese courier company SF Express was using blockchain technology to track the delivery of medicines during the COVID-19 pandemic. Their solution was able to track, verify and log every transaction in the logistics process, as well as determine the priority level of each order. By combining blockchain technology and Big Data, the company created a traceable logistics network that could prioritize the delivery of goods and minimize the risk of fraud or illegal products entering the supply chain.
Internet of Things (IoT)
Intelligent medical devices are constantly helping doctors by collecting data on the condition of patients in real-time: information about the heartbeat, oxygen levels, body temperature, and other indicators. They are used in sports medicine, the study of internal organs, remote monitoring of patients’ health, etc. Storing such critical data in the blockchain will increase their safety and reliability. Blockchain solutions will also create a single transparent database that participants can access.
The Tackle device helps track women’s fertility. Data about the patient’s condition during the examination is transmitted to the mobile application and recorded on the blockchain provided by Ubirch, which specializes in blockchain solutions for IoT devices.
Blockchain technology has great potential to improve the efficiency of electricity service providers.
LO3 Energy has developed the Pando platform, a marketplace for energy suppliers. The solution allows users flexible trading: suppliers can independently form a marketplace, allowing consumers to purchase energy from local renewable sources. The platform will enable suppliers to analyze the market through reports on sales, buyers, trade dynamics, and others.
Consumers can access an application that allows them to track the statistics of their energy consumption.
Encouragement of energy saving
Blockchain technology and tokens created on its basis help the development of various loyalty programs, the purpose of which may be to increase energy savings.
One such program is the EnergiMine project. The company trades energy on behalf of large European enterprises and uses blockchain to decentralize energy markets and create the EnergiToken platform that encourages energy conservation. Through various energy-saving actions, such as choosing greener transportation or purchasing energy-saving devices, users can earn rewards in ETK tokens, which they can then use to, for example, pay electricity bills, buy energy-efficient appliances, or pay for public transport.
Thanks to the blockchain, platforms are being created that predict the outcome of sports competitions and any event: natural disasters, state elections, and auctions. The participant makes a bet and purchases intra-platform coins or shares. He gets a win or a loss, depending on the event’s outcome.
The leader in forecasting is Gnosis. It is a decentralized and open-source prediction platform. The site is distinguished by honesty and transparency, fraudulent actions with manipulating results, decreased bet amounts, and other excluded problems.
Another critical project is Augur. This is a well-known Ethereum-based platform with its REP token. Each visitor to the forum can create a forecasting market (predictions) and not only take part in it but also profit from other users.
Distribution of multimedia files
The legal distribution of multimedia files, the fight against piracy, and copyright protection are closely related. Blockchain system allows you to solve problems:
- Increasing payment methods for listening to or viewing media files.
- Reducing the risk of illegally downloading and copying documents.
- Transparent system for recording data about the target audience.
The PledgeMusic platform introduced a project to eliminate the problem of copyright infringement, payment, and audience verification. Authors upload their files, and metadata is stored in the block—users wishing to download content view the materials through the registry. Payment for listening or viewing is carried out in real-time.
iTunes is a blockchain startup that offers a platform for sharing data between users. The problem of piracy is excluded: platform participants exchange works of their composition. Payment is made in bitcoins.
The use and value of any technological innovation in any industry will grow in line with the growth in the number of companies using it. The more players in the logistics market implement blockchain technology, the closer the industry becomes to a transparent and reliable ecosystem. Blockchain technology has several characteristics that can be useful for almost any industry.