What if you discovered a path to optimize and accelerate the flow of physical goods, as well as the complex flow of information and financial transactions for your business? A route that would facilitate greater efficiency, provides superior transparency, and produces unquestioned traceability in the supply chain? A road that would greatly reduce costs and errors, even if it is less traveled by, might indeed make all the difference.
Enter in blockchain, a distributed digital ledger technology that can record transactions between parties in a secure and permanent way by being digitally signed to ensure its authenticity and integrity. Initially introduced in 2009 as a financial ledger for the crypto- currency, Bitcoin; blockchain was introduced as software that records and stores information on a decentralized ledger shared across millions of computers which can’t be changed and is nearly impossible to hack. Inevitably, the software design inspired other applications.
Every transaction is recorded on a ‘block’ and across multiple copies of the ledger that are distributed over many computers, making it completely transparent. Each block links to the one before it and after it, making it very secure. Blockchain can positively impact warehousing to delivery to payment with a built-in chain of command. It also would eliminate disputes regarding transactions, increasing reliability and integrity. (All entities on the supply chain have access to the digital ledger, and records cannot be erased.) The proverbial door would be closed on reliance for manual data entry and paper based documentation.
With no need for a central, unifying authority saying what transactions are valid and which ones are not, blockchain makes an ideal ledger and settlement solution for joint ventures and affiliate relationships. It eliminates the need for clearinghouses and settlement agents, cutting out financial “middle-men” and reducing costs while improving the speed at which transactions can be made, verified, settled, and recorded. The concept of blockchain works particularly well at tracking how assets move through a supply chain, through certain vendors and factories, to transportation lines, and into their final destinations.
Blockchain implements the ability to trace each product to its source. For example, Walmart has been experimenting with using the technology to keep track of its pork it sources from China and the blockchain records where each price of meat came from, was processed, stored and its sell-by-date. This new path ensures secure data exchange and a tamper-proof repository for documentation, such as the status of customs information and bills of lading. By allowing all involved parties to view the progress of goods through the supply chain, and understanding where a container is in transit; the technology will lead to reduced delays and fraud, which inevitably leads to cost reduction.
The real difficulty with blockchain is practical application. Currently, the technology is still in infant stages and far from being enforced industry-wide at scale in logistics. Challenges such as achieving successful industry adoption will be difficult through diverse supply chain stakeholders with varying interests and legacy processes.
Blockchain not only has the potential to revolutionize the logistics industry, it could transform the economic world. The options that we have for interacting with one another could be completely reconstructed without the need for banks to send money to one another, potentially making central banking obsolete.