The value in blockchain for logistics is about more than just retaining information. Blockchain technology builds value in the supply chain through better transparency and process standardization, but it holds additional value through new logistics services and business models. For instance, blockchain enhances freight auditing and invoice management, as well as cybersecurity. To access this value, supply chain executives need to understand what’s holding it back, how it depends on integrated systems, and a few best practices to maximize returns.
Supply Chain Leaders May Underestimate the Value in Blockchain for Logistics
The modern logistics industry includes more than 500,000 trucking companies in the U.S., reports DHL, and for shippers, this amounts to a possible number of trucking contacts just as high. The numerous relationships and possibilities lead to low transparency, major differences between processes, the creation of data silos, and diverse types and levels of technology.
- Managers and executives may lack the skills and knowledge necessary to move the company toward blockchain-based solutions.
- Limited access to cryptocurrencies.
- Personal and professional bias.
- Lack of central authority in change management.
- Potential volatility.
- Inexperience in the BiTA.
An Introduction to Blockchain and Its Potential Benefits and Drawbacks in Supply Chain Management
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The Value in Blockchain Exists in Application in All Supply Chain Processes
Blockchain technology is a new way of managing data. Companies can maintain individual and shared datasets, allowing companies to streamline and integrate processes, says Accenture. Shippers and businesses can finally trust data, eliminate the uncertainty in one-off situations, reconcile issues, and increase transparency. The value in blockchain for logistics can be further refined into these specific benefits.
- Dispute resolution. Supply chain disputes are often the result of incorrect assumptions and interpretation of contractual terms, reports the Global Supply Chain Law Blog. Blockchain eliminates this uncertainty. Smart contracts, powered by blockchain, keep the middleman in check and increase efficiency through collaboration.
- Fraud detection. Counterfeit products, reports Lauren Monsen of Share America, cost the global economy more than $250 billion annually. This problem lies in the inability to track product origin, but blockchain can track the product and its raw materials throughout all activities and shipments. This ensures validation of product, order, and shipping data in real-time.
- Capacity monitoring. The capacity crunch is accelerating, and monitoring capacity, as well as working with multiple carriers, will be key to ensuring available carriers for freight.
- Performance measurement. Blockchain allows companies to track employee performance and use analytics to provide real-time performance measurement, including advice for ways to improve performance.
- Manufacturing moves closer to end-users. Blockchain also helps with the manufacturing process, helping consumers tap into additive manufacturing sources, like 3D printing, for parts fulfillment, reducing the cost of manufacturing and transport along the way.
- Reduced risk of tampering and theft increases consumer confidence. This is a major source of added value through blockchain. Even legitimate products are at risk of tampering and theft, and blockchain can help reduce this risk.
- Reduced reliance on third-parties to manage transactions. More information and accountability in the supply chain will have the natural result of completing more tasks in-house, but blockchain technology may quickly become a third-party resource, much like transportation management in today’s world.
How to Unlock Its True Value
Understanding the value of blockchain is only half the battle. Supply chain leaders seeking to embrace the blockchain data revolution need to know how to move existing operations into a blockchain-conducive structure. To achieve this goal, executives and managers should follow these tips, as explained by DHL.
- Center all process on collaboration.
- Research blockchain technology platforms and capabilities.
- Define the business areas for use of blockchain with high returns.
- Set clear, concise expectations for blockchain implementation.
- Leverage the IoT and automated technologies.
- Create a pilot program.
- Align blockchain systems with business strategies.
- Expand the solution across all business opportunities.
- Keep customers informed.
- Report results to shareholders.
- Continuous improvement will increase the value of blockchain.
Kickstart Your Operation Now
The value in blockchain for logistics is only as strong as the work supply chain managers put into preparing for the use of this technology. Managers must implement automated processes, leverage the power of internal and external resources, work together, plan accordingly, and look for ways to continuously improve. Since planning for such technological innovation can be stressful, outsourcing to a third-party consultant or logistics provider (3PL), like Cerasis, may be the most effective way to bring existing operations up to speed and ready to access the value in blockchain for logistics. In fact, cloud-based logistics platforms are already on track to use blockchain technology within the next decade, so your organization may be much closer to using it than you realize.