Transforming Supply Chain and Logistics with Blockchain

Posted By : Aditi | July 9, 2019

Supply Chain and Logistics Services

Supply Chain and Logistics Solutions: An Overview


There is an increasing demand for supply chain and logistics solutions worldwide. The global supply chain industry faces several challenges due to poor visibility of a product’s origin, asset mishandling, low transparency, and authentication issues. The implementation of blockchain technology can overcome these supply chain challenge. According to Gartner, blockchain is currently on the peak of inflated expectations. The business value-add of blockchain is expected to grow more than $176B by 2025 and exceed $3.1T by 2030. 

Blockchain is a type of  distributed ledger that provides proof of ownership and transfer of ownership from one entity to another without involving a trusted third-party intermediary.  The value transferred can also move to an extended supply chain while ensuring that every supply chain event is chronologically recorded.

A report by Capgemini Research Institute reveals that blockchain will become global by 2025. It will enter mainstream businesses and support supply chains worldwide. Blockchain eliminates the need for middlemen in the supply chain. It simplifies complicated and fragmented supply chain processes. Blockchain technology ensures transparency in documents and transactions for improving supply chain efficiency and agility. 


Leveraging Blockchain to optimize Efficiency and Transparency of a Supply Chain

The prominent use of blockchain is in cryptocurrency trading. But, the applications of blockchain can also be used in supply chain management for the purpose of exchanging, tracking, honoring agreements, and executing payments. Blockchain increases the transparency of the supply chain. It records every transaction on a block and across multiple copies of an immutable ledger that is distributed over many nodes (computers). It is also highly secure because every block links to the one before it and after it. 

Supply Chain and Logistics Services
Supply Chain and Logistics Solutions

From warehousing to delivery and payment, blockchain has a positive impact on each component of the supply chain. Blockchain provides reliability and integrity in the supply chain. There is no dispute regarding supply chain transactions because all entities on the chain have the same version of the ledger. The Records on the blockchain cannot be deleted, which is critical for a transparent supply chain. 


Key Blockchain Applications for Supply Chain and Logistics Solutions


RFID-driven Contract Bids and Execution: 

RFID tags are used in the supply chain to store information about products. It enables IT systems to read the tags automatically and then process them. It will be beneficial to use RFID tags for smart contracts in logistics. 

The possible set up could be as follows:

  1. RFID tags for pallets store information on delivery location and date
  2. Logistics partners run applications for these RFID tags and bid for a delivery contract
  3. The logistics partner providing optimal price and service gets the contract
  4. A smart contract then tracks the status and delivery performance of the product

Traceability in Supply Chain and Logistics Solutions: 

Businesses can use distributed ledger systems (blockchain) to record the product status at each stage of production. These records are permanent and immutable. Blockchain mechanisms in the supply chain make it possible to trace each product back to its source. In case of a product recall, enterprises can gain insights into which batches are affected and who bought them. 

Electric Power Micro-Grids:

Enterprises who operate in the power generation and supply domain can use blockchain technology to improve efficiency. Smart contracts can redistribute excess power from solar panels using a transactive grid. It is a blockchain application that monitors and redistributes energy in a neighborhood micro-grid. This program automates buying and selling of green energy to save costs. The process uses the Ethereum blockchain platform which is designed specifically to build and execute smart contracts. 

Automotive Supplier Payments in Supply Chain and Logistics Solutions: 

Blockchain enables the transfer of funds anywhere in the world without the need for traditional banking transactions. The transactions occur directly between payers and payees. Bitcoin transfers incur low fees. For instance, Tomcar, an Australian vehicle manufacturer uses Bitcoin to pay some of its suppliers. 


Use Case of Blockchain in Supply Chain Management


Tokenising Shipping Industry with Ethereum

300Cubits, a Hong Kong-based company in 2018 set out to solve an expensive problem in the container shipping industry. They faced issues of traceability, high costs, and inefficient delivery.  The problem was the preponderance of no-shows due to which shippers failed to deliver the cargo that was booked on a container vessel. The outcome was overbooking of container vessel to compensate for expected no-shows. 

300Cubits in response to the problems stated above issued a TEU cryptocurrency and distributed a number of tokens to shippers and shipping lines in 2018. The participants used this blockchain solution based on Ethereum to make deposits using the tokens while cementing the shipping transactions (contract).

How Does this Blockchain Based Ethereum Solution Works

The shipper and the shipping line both deposit a token in the blockchain when shipper books cargo onto a sailing. Shipper and shipping line should honor the booking to recover their escrowed tokens. 

Now, in this case, if the shipper does not load the cargo in the container vessel on time, then the shipping line can recover it’s token and shipper’s token from escrow. Similarly, if the shipping line fails to deliver the cargo on time, the shipper receives both deposited tokens. 

How Does Blockchain Solve the Problem

It reduces the possibility of untimely delivery of cargo to ports because if this happens shippers will have to pay money. Similarly, the shipping line will also lose their money every time they miss a customer’s shipment. This blockchain solution will reduce overbooking activity by shipping lines. It also ensures the timely transportation of cargoes. 

Application of Blockchain in Supply Chain Management 

  1. BHP Billiton, the world’s largest mining firm announced that it will use blockchain to track and record data throughout the mining process with its vendors. It will increase its business efficiency internally. 
  2. In the food industry, it is necessary to have genuine records to trace each product to its source. Walmart uses blockchain to keep track of its pork that it sources from China. Blockchain records from where each piece of pork came from, processed, stored and its sell-by-date. Nestle, Dole, and Tyson also use blockchain for a similar purpose. 


Gain Benefits of Using Blockchain in Supply Chain with Oodles

We develop blockchain solutions that impact every facet of supply chain and logistics. We can develop distributed ledgers to ensure transparency across industries. Our blockchain solutions are customizable and enable transparent multi-party transactions.

We have experience in integrating blockchain technologies with different supply chain modules like inventory, warehouse, and accounting. Our ERP team develops smart SCM solutions that provide tamperproof transactional records with data from IoT sensors. Our supply chain software development services eliminate the need for third-party entities. 


Concluding Thoughts

According to a survey conducted by the World Economic Forum in 2015, it is predicted that 10% of global GDP will be stored on the blockchain by 2027.  Blockchain technology can transform the supply chain and logistics solutions by storing the entire transaction history on a shared database. With blockchain technology, customers can track their product’s journey from dispatch to arrival. It will enable customers to make informed decisions.

Also Read: Optimizing Supply Chain Management with Robotic Process Automation


About Author


Aditi Dutt is a technology writer who has an avid interest in ERP technologies. Aditi follows the latest ERP developments and trends to keep readers informed about their impact on business processes. She is also a next-gen technology enthusiast who covers IoT, Blockchain, AI and AR/VR technologies in her articles.

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