One of the definitions of blockchain is: “Blockchain is a technology for storing and transmitting information without a single point of control.” It allows you to create databases and share them among users thanks to an approach based on the characteristics of transparency, reliability and decentralization.
The most popular and classic application for blockchain technology is cryptocurrency. But in a large number of cases, blockchain technology is able to modernize almost any industry: insurance, healthcare, money transfers, and others that we wrote about earlier. In particular, one of the areas of blockchain use is undoubtedly supply and logistics, as well as tracking this process.
New technologies offer promising opportunities for integrated supply chain improvement.
Existing problems
The supply chain represents all the connections involved in the creation and distribution of goods, from raw materials to the finished product coming into the possession of the buyer. Currently, supply chains can be dispersed into hundreds of stages and dozens of geographical locations, which makes the process of tracking events and investigating incidents very difficult.
Lack of transparency of supply chains can also cause confusion why such a price for the entire process.
Also, the investigation and reporting of illegal activities related to supply chains is extremely difficult. The problem of counterfeit, fraudulent and suspicious goods (CFSI) causes fear. Thus, this creates a large number of minor problems that can be solved only after the supply process is established with all the transparency and accuracy of the data.
The use of blockchain technology can help increase transparency and improve supply tracking mechanisms, as well as reduce administrative costs.
In addition, one of the biggest advantages of blockchain technology in general, which contributes to increasing its role in various sectors — from financial services to healthcare — is its immutability.
Any information stored in the blockchain cannot be changed, which makes the technology ideal for keeping records of any products distributed along the supply chain.
This immutable registry system creates a trusted network — an ecosystem of supplies.
Unlike paper records, which cannot provide the necessary level of traceability and security, blockchain has a rigid structure and has such efficiency, transparency, security and risk reduction capabilities that cannot be achieved by other systems.
In the field of logistics, blockchain greatly simplifies the work between exporters, importers, carriers, agents and customs authorities. The technology helps to reduce the time and cost of processing paper documents, allowing faster and easier to issue invoices for cargo, sanitary certificates, invoices and other accompanying documents.
Walmart, McDonald's, IBM, FedEx, Alibaba, Starbucks and many other well-known brands have been using blockchain for several years to optimize their supply chains. After all, thanks to the new technology, you can save billions of dollars, simplify document flow, eliminate errors and inaccuracies, and increase customer trust.
For example, Walmart, where blockchain can play a huge role in the supply chain. A leading American retailer has integrated blockchain into its food supply chain to track every point of contact through which a product passes before it reaches shoppers' homes.
And this allowed the retailer to track everything in real time.
Distribution along the food supply chain especially benefits from the use of blockchain. Its immutability helps to check the routes, find and reduce risks such as food fraud, illegal fishing or exploitation of workers, as well as contribute to sustainable development. Indeed, blockchain turns out to be useful both for society as a whole and for business.
Blockchain has the potential to transform supply chains and change the ways in which we produce, sell, buy and consume products. Increasing transparency, traceability and security of supply chains can be a breakthrough in becoming a safer and much more reliable economy, by promoting trust and honesty and by preventing the use of questionable practices.
There are many blockchain platforms in logistics:
- MAERSK
- SUKU
- Trade Lens
- VECHAIN
It should also be taken into account that the development of smart contracts will be necessary for the introduction of blockchain into the supply chain.
These are computer algorithms for automating formalized business processes and the exchange of values, such as money, goods, property rights, information or documents. They speed up and reduce the cost of processes, eliminate intermediaries, and also help to fight corruption and the human factor.
Final thought
It is still difficult for people to come to the idea that there is already an opportunity to move away from the well-known methods of working and doing business - all this is already imperceptibly becoming obsolete for us, and new technologies are gradually taking over the world. Blockchain is one of such technologies.
