Can Blockchain Transform Logistics and Supply Chain?
Security, transparency, and tracking are three attributes that Blockchain brings to the table when pertaining to transactions. Does this sound too good to be true, especially if you're involved directly or indirectly in logistics or supply chain?
Imagine an ecosystem that would allow you to be fully informed each time an item changes hands, simply because the associated transaction would be documented and, simultaneously, a permanent history related to the item from the time it's manufactured to the time it hits the shelves would be created. How would this change the way you transact today? Yes, you're right; delays would be reduced, costs lowered, and human errors quasi-eliminated.
Well, let's stop using the conditional tense because it's very much real. It's happening now.
Benefits of Blockchain to Logistics and Supply Chain
Your number one goal when you sell a product is to ensure that your client receives the item at the right place, in time, uncompromised and for a pre-determined cost. To achieve this objective requires that a few steps be involved such as storage, movement of goods from one warehouse to another, inventory tracking, transportation, etc. These steps cannot be successfully undertaken if series of tasks aren't optimally run. Blockchain provides the technology that improves those tasks.
Increased transparency implies that a product's journey is documented across the supply chain, from its point of origin to its reception by the client and all the stages in between. Data related to recording and tracking become indisputable. This environment facilitates trust among all stakeholders, which in turn greatly improves internal and external relationships and, ultimately, increases the likeliness of transacting.
Another advantage of Blockchain is security. I do not necessarily refer to data hacking, even though Blockchain's decentralized architecture makes the theft of computer-stored data almost impossible. By security I point out the fact that the Blockchain technology removes the need for auditing to depend on trust, providing a globally distributed, decentralized ledger of which everyone has the exact same copy. As opposed to conventional auditing that entails the confirmation of transactions and balances on a company's accounting ledger at the end of the period, a Blockchain-based transaction provides a permanent and immutable record of the transaction at the same time as the transaction itself. Thus, there is visibility over and therefore indisputable trace of every single transaction associated to a product.
Do Blockchain and IoT Walk Hand in Hand?
IoT or "Internet of Things" is a network of physical devices, vehicles, home appliances, and other items embedded with electronics, software, sensors, actuators, and network connectivity which enables these objects to connect and exchange data. How does it pertain to supply chain and logistics?
Radio-Frequency Identification (RFID) and Global Positioning System (GPS) sensors can track products from the warehouse to the shelves. Sensors can gather a wide range of information that helps companies run their business more efficiently by improving, among other attributes, quality control, on-time deliveries and product forecasting.
A tracking device inside a delivery truck allows geo-localization in real-time. The data is sent to the cloud, which enables the trucking company to track its fleet anywhere, anytime and on any device connected to the Internet. Accessorily, thanks to the IoT device, other valuable information becomes available like the driver's behavior (speeding, resting time, etc.) while transporting merchandises.
All this IoT-generated data is recorded in the Blockchain and validated through, for example, the execution of a smart contract. As soon as a given product leaves a given warehouse by truck, the sensor attached to the product sends a signal that instantly executes a smart contract built on the realization of this specific action.
Blockchain and IoT: The Killer Combination?
Last January, two joint ventures made headlines. And they're both bringing to market Blockchain-based platforms that incorporate IoT capabilities.
The first one is the joint venture between IBM and Maersk. The newly formed entity will deploy a Blockchain-based electronic shipping system that will digitize supply chains and track international cargo in real time. The platform will save the global shipping industry billions of dollars every year by eliminating a system (EDI, paper-based) that often times paralyzes containers in receiving yards for a lengthy period of time.
A couple weeks later, Consensys and Amalto joined forces to found Ondiflo, another Blockchain platform that automates all ticketing-based services for the Oil and Gas industry. And the savings will also be massive.
There is a current phenomenon that cannot be ignored.