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Blockchain is set to make logistics more efficient, secure, and transparent.
Logistics is an essential part of supply chain management. The report published by Transparency Market Research suggests that the global logistics market will reach $15.5 trillion by 2023. But companies lose a substantial part of their profits for the following reasons:
a. Inefficient practices
b. Unnecessary expenses
Blockchain is set to transform the dynamics of supply chain logistics by:
a. Improving the speed of operations
b. Streamlining processes
c. Enhancing security
A recent whitepaper released by World Economic Forum suggests that distributed ledger technology such as Blockchain can increase global trade by more than $1 trillion in the next decade. Blockchain has the power to minimize trade gaps and streamline trading processes. The following points suggest how:
a. By implementing verified smart contracts that adapt according to changing market conditions and mutual agreement.
b. By eliminating frauds, errors, and inaccuracies.
c. By cutting unnecessary paperwork.
d. By improving transaction flow.
Conglomerates like Amazon, Walmart, and Unilever are already leveraging Blockchain to enhance their supply chain logistics management.
Let’s talk in detail about the benefits of Blockchain and how it can improve supply chain logistics management.
1. Blockchain improves efficiency.
Blockchain provides an efficient way to track shipping goods. It monitors the entire product life-cycle and facilitates ownership changes between manufacturers, retailers, and end-users. It eliminates redundant paperwork by developing smart contracts that adapt to changing conditions. Moreover, it also puts an end to information silos and ensures secured financial transactions through its distributed ledger system.
2. Blockchain enhances security.
Most companies have a centralized data repository that contains critical business data. If a hacker gains access to this repository, they can delete or change the data stored inside it. Blockchain employs cryptographic security techniques that restrict access to third parties to modify the information stored in the chain.
3. Blockchain creates transparency.
As described above, Blockchain is a distributed ledger system that maintains records of all transactions in a single ledger. This ledger is visible to all the stakeholders and cannot be tampered with. Moreover, since all the stakeholders have access to the same version of the ledger, there cannot be any disagreements. Companies can trace the exact location of the goods and who owns them in real-time.
4. Blockchain employs smart contracts.
Studies reveal that about $140 billion is tied up in shipping disputes every day. Another shocking statistic is that it takes about 42 days to settle invoices on average, which further delays transportation. Blockchain improves supply chain logistics by employing smart contracts that automate agreements’ legal binding along the supply chain. It allows companies to enforce compliance through predecided transaction rules, which minimizes the risk that the other party will adhere to the clauses mentioned in the agreement.
5. Blockchain boosts product traceability.
One of the most critical uses of Blockchain is that it tracks the real-time location of products and sends reports to the supply chain logistics department. Blockchain can integrate the Internet of Things (IoT) and mobile-based technologies to trace the movement of finished goods. For example, small digital sensors can be attached to the goods that can track their location from start to finish. It will help to:
a. Boost monitoring of goods supplied.
b. Shorten delivery times
c. Collect useful information such as:
i. Their past locations
ii. Ownership changes
iii. Time for which the goods have been stored in a facility
There are numerous benefits of Blockchain in supply chain logistics. They reduce the likelihood of lost products, improve storage processes, boost goods tracking, and record vendors, suppliers, and distributors’ past performance. Supply chains run through multiple geographical locations that are accompanied by numerous stakeholders and substantial paperwork. Blockchain integrates all the processes and provides a transparent and secure way to improve the business’s supply chain logistics.
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Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.
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