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Up to 64% of supply chain leaders consider Big Data Analytics the best way to overcome supply chain challenges, asserts Antonia Renner of ComputerWorld, but new technologies, such as logistics automation and blockchain, may hold much more opportunity than meets the eye. Logistics automation and blockchain have potential applicability to payment processing, freight location monitoring, order fulfillment, and more. Supply chain managers considering the possibilities of blockchain need to understand their existing limitations, the prospects for the future, and how these technologies will become integral to effective supply chain management.

What Limits Automation in Today’s Supply Chains?

The greatest barrier to successful implementation of logistics automation and blockchain is supply chain executives. Approximately 83% of supply chain entities have not leveraged big data analytics for supply chain management, and most businesses assume movement toward new technology requires small steps. As explained by Swisslog via Supply Chain 24/7, failure to embrace new technologies, including logistics automation and blockchain, will result in lost opportunities and greater costs to maintain a competitive advantage. In fact, the adoption problem affecting implementation of logistics automation and blockchain was noted by the 22nd Annual Third-Party Logistics Study, reports Penske Logistics. Although 30% of third-party logistics providers (3PLs) and 16% view blockchain as a potential application in the supply chain, engagement with the technology is still out of reach.

An Introduction to Blockchain and Its Potential Benefits and Drawbacks in Supply Chain Management



Logistics Automation and Blockchain Are Two Sides of the Same Coin

The opportunities for improvement through logistics automation and blockchain are evident in every corner of the industry. Autonomous trucks are becoming more accepted. Drone delivery is around the corner. Supply chain managers need ways to streamline operations and move more product. In logistics, companies have unlocked the potential of third-party logistics providers, as well as value-added services, like freight consolidation, invoice auditing, and small package handling. While the industry has grown to accept automation, including robotic systems and machine-learning to self-optimize processes, the application of blockchain technology is scarce. Unlike blockchain technology’s proven and applied use in managing currencies, particularly the cryptocurrency, Bitcoin, the application of blockchain technology in logistics will take some time to sort out and plan. Over time, logistics automation and blockchain technology will merge into a single, traceable and standardized process.

How Will Logistics Automation and Blockchain Affect Supply Chains?

Although blockchain technology might still be in the outfield, supply chain leaders agree that automation and digitization of the supply chain will be the result of greater competitiveness. It’s the Amazon Effect on supply chains, and it will lead to the same path of moving toward blockchain.

  1. Better recordkeeping leads to efficiency, greater accountability and effective compliance. According to Robert J. Bowman of Supply Chain Brain, the potential use of smart contracts to enforce SLA terms and agreements is still subject to the refusal of parties to meet their obligations. Today’s level of blockchain simply provides a means of tracking such refusal or fulfillment of obligations, which is why more companies are joining the Blockchain in Trucking Alliance (BiTA) to develop industry standards and use blockchain to improve operations.
  2. Connectivity and collaboration between logistics providers, systems, and consumers increase with the application of logistics automation and blockchain Systems and people working together is a hallmark of effective logistics.
  3. Logistics automation and blockchain reduce market volatility due to shipper/buyer uncertainty. A closed network of information between authorized parties, located in a decentralized system, will become a master data management platform, explains TMW, allowing supply chains to anticipate threats and stabilize operations.
  4. Applying new technology to the supply chain elevates the skills and confidence of workers. With the talent shortage worsening, not to mention the trucker shortage, logistics automation and blockchain will help bridge the talent gap in supply chains.
  5. Improved artificial intelligence (AI) capabilities. AI uses historic and real-time records in decision-making, so blockchain will increase the potential applications of AI, including managing payment processing, handling customer complaints and inquiries, and increasing supply chain efficiency.
  6. Delivery options will require more robust traceability in supply chains. Consumers want more delivery options, and while shippers are quick to provide more options, carriers may simply lack the ability to meet these demands. Logistics automation and blockchain will have the net effect of reducing work for carriers in freight scheduling and planning. Thus, carriers will have more options to offer.

Automation and Blockchain Will Continue to Refine Basic and Complex Supply Chain Functions

Logistics automation is essential to success in the omnichannel world, and blockchain technology will further enhance your operation and reduce the stress with managing freight. The potential includes collaboration, cost reduction, efficiency, productivity, and more. The power of logistics automation and blockchain is only going to increase, and shippers should start considering exploring and implementing automated, blockchain-based solutions now.