The Supply Chain Revolution will be Powered by Blockchain

The Supply Chain Revolution will be Powered by Blockchain

The terms “blockchain” and “bitcoin” are almost used synonymously, leaving many outside the cryptocurrency loop to think blockchain has no application in their industries. The truth is, there are so many applications for blockchain across sectors. Blockchain, simply speaking, is a decentralized public ledger system - which records any transaction between parties in real-time and in a secure and permanent way. Also called distributed ledger technology (DLT), the always up-to-date, secure and authentic data that is enabled through blockchain allows for instant access to the most accurate information in order to drive efficient decision-making. 

Currently, most businesses rely on decentralized ledgers that don’t share information or provide real transparency to the accuracy of the data. As a result, players in a network must trust each other and rely on their own systems to flag inconsistencies between various data sources. Making data available between multiple parties through blockchain, there is no longer a need for third parties to authenticate and record transactions. This reduces errors and makes the overall system more efficient. 

The supply chain is a prime example of an industry that will benefit from blockchain technology– the sector literally moves the world, and it is ready for a revolution. There are so many applications for blockchain to improve efficiencies across cargo transportation and logistics– allowing a notoriously paper-driven, manual process-laden industry to create and tap big data in a transparent way. The movement of goods across a country or around the world requires multiple players and each change of custody presents an opportunity for error.

Here are three ways blockchain can improve the flow of goods around the world:

1. Ensuring data integrity throughout the chain of custody

In Air Cargo, the International Air Transport Association (IATA) has reported that a single booking information for a typical booking is re-typed as many as 97 times for various systems and many parties across a network, multiplying the chances for errors 

and delays. And that’s just to create a booking. Once a shipment is actually en route, whether it’s by air, land or sea, there are numerous handoffs between the shipper, a freight forwarder, a cargo operator, during customs clearance, into warehouses onto trucks and off to a final destination. Paper forms are handed off, waybill numbers are copied by hand – over and over again. By digitizing the sharing of information in an un-alterable state, blockchain gives all parties access to the same data – information isn’t entered and re-entered, and paper copies of manifest aren’t literallychanging hands. Everyone involved has line of sight into where the cargo is, why and what’s happening next.  

 1 .Cold chain management – including pharmaceuticals

The most timely example of an application for blockchain in the supply chain is the transportation of pharmaceuticals – specifically, the COVID-19 vaccine. All eyes are on what is arguably the most precious cargo of the year. Temperature-sensitive cargo requires standardized procedures across the network, proactive communication with all supply chain links and real-time monitoring of temperatures in the air and on the ground. Knowing and controlling the climate as the vaccine moves from port to port is what will keep it safe and effective. Our lives –all of us, globally—are depending on it.

In a study conducted by Maersk, considered the largest container shipping line and vessel operator in the world, it was reported that a shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organizations, including more than 200 different interactions and communications among them. 

Modum of Switzerland builds systems using blockchain technology to manage the production and shipment of medicines. It tracks any pharmaceutical shipment from production to pick up to final delivery and records the specific temperatures that such shipment was subjected to. Highlighting temperature excursions helps determine whether medication is safe to administer, thereby improvingpatient health and safety. 

  1. Timely and accurate account management

Who doesn’t want to speed up cash flow? Traditionally, the logistic industry has had a long and slow payment cycle. A blockchain-enabled digital contract and digital electronic proof-of-delivery provides evidence of contract fulfillment, which can be used to speed payment from (and to) parties involved in the shipping process, including forwarders, truckers, importers, airlines, railroads, and others. Furthermore, by using smart contracts combined with tokens, parties can pay instantly for any shipping services and set deadlines and quality standards.

In order to implement blockchain across the logistics industry, clearlyprocesses are needed and therewill be some challenges to overcome. Standards must be developed for these technologies to be applied universally. Enter the Blockchain in Transport Alliance (BiTA). The organization seeks to develop common standards and practices for distributed ledger technology in the transportation industry. BiTA strives to educate professionals about the benefits of using this technology in the industry. Member companies are diverse, ranging from integrators to startups, from railroads to airlines.

The bottom line on blockchain and the logistics industry is this: there are many applicationsfor this technology. Improving efficiency, securing data, and building trust will reshape the way that business is conducted, and speed up commerce around the globe. In my opinion, the blockchain serves as the irrefutable truth between transactions – it could be called a true definition of trusted and verified.

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