With the recent outbreak of COVID-19, “blockchain managers” were listed as one of the critical workers on the Coronavirus Guidance for America guidelines, under the food and agriculture sector. This is because blockchain is becoming an integral part of many industries, the logistics industry included. Blockchain is not just for Bitcoin and other digital currencies anymore. Here’s why.
If you were to say a few years ago that this technology could revolutionize how logistics experts manage supply chain data and distribute goods, people would have looked at you with confusion. Blockchain technology was the driving force behind Bitcoin, but now it has switched lanes and driven straight into the heart of multiple industries, the logistics industry included. While it hasn’t completely revolutionized the way goods move throughout the supply chain, it has begun to gain speed and made many people think about implementing this powerful technology into their logistics plan.
A bit about blockchain technology
Let’s back up and take a look at blockchain technology. More specifically, what it is and how it works.
Stated simply, blockchain is a technology that allows for information to be distributed to multiple sources, but never copied. It was originally created by Satoshi Nakamoto (a pseudonym) as the cornerstone technology for digital currency like Bitcoin.
Blockchain technology creates a series of time-stamped records that cannot be changed. These records are managed by a series of computers that are spread out across multiple entities. All data within a blockchain is secured and bound together cryptographically (which is why the term crypto currency is associated with digital currency). Since there is no central authority that governs the data in a blockchain, all the information is transparent, accessible and democratically managed.
Secure information that is passed between multiple entities? It’s easy to see why this might be of use to supply chain entities.
Forging links in the blockchain
The path information takes when traversing a blockchain is simple:
- An entity creates a piece of information (a block) that enters the blockchain.
- The block is verified by other computers.
- Once verified the block is stored in the blockchain. This creates a record and history that is unique to the block.
- The block is free to be distributed to other entities throughout the blockchain.
Linking the two chains
Blockchain and the supply chain make the perfect pair, which is why there has been a lot of buzz in the logistics industry about how the technology can transform the industry. But how?
Blockchain has traditionally been used to process millions of small transactions using digital currency, and because processing these transactions is free, the technology is ideal for large networks (like the supply chain) where multiple entities are processing transactions or swapping information. Sound like a great solution for the supply chain? That’s because it presents the capability of being an end-to-end solution for the industry. Here’s how the technology has been put into effect.
Supply chain auditing
Transparency goes hand in hand with blockchain, and the technology provides an easy way to audit the flow of information from one supply chain entity to another. This will provide unalterable information that follows the journey of products from manufacturers to carriers, distributors, retail locations, etc.
Security of data
While information is readily available to all entities within a blockchain, meaning anything that is not meant for open viewing should be kept out of the blockchain, the information that is distributed within a supply is about as secure as can be. This is because no data that is within a blockchain can be changed, copied or falsified. Falsifying a piece of information within a blockchain is virtually impossible because it requires falsifying the entire blockchain, which is verified and stored by other computers spread out across all other entities. This allows logistics companies and shippers to prevent fraud, theft and other security concerns.
Every day, over $140 billion is tied up in disputes for payments between carriers and shippers. This clogged cash flow creates a strain on the supply chain that breeds inefficiency. Payment processing using blockchain technology can help entities organize and distribute invoices and even payments, which will help cut down on administrative costs, prevent fraud, increase efficiency and make companies “greener” by reducing paper invoices and transaction records.
Product tracking and transparency
The distribution of data from one supply chain entity to the next will help with the tracking of products as they move throughout the supply chain, helping logistics professionals keep track of their products while providing them with a steady stream of data that can be used to optimize everything they do in the future.
Transportation and storage of temperature-controlled goods
The medical and food/beverage industries are ripe with temperature-controlled goods that need to be properly and efficiently stored and shipped throughout the country. Unfortunately, even small deviations from heavily regulated temperatures for certain goods can render those goods unfit for sales and consumption. This places an enormous strain on companies to keep these goods within the appropriate temperatures the entire way through the supply chain. This results in a steady stream of data including product count, location, destination, current temperature, etc. that needs to be recorded, moved and closely monitored as products go from point A to point B.
Blockchain allows for all of this data to be recorded throughout the process and any issues that arise during transport can be promptly addressed. It also creates an auditable record of events that can be studied to develop ways of preventing future issues from occurring.
Link up with King
During these unprecedented times, we understand that real-time data, risk mitigation and innovative inventory management are needed more than ever. You may not be ready to completely implement the technology into your supply chain, but there are other ways you can optimize your fulfillment, warehousing and shipping in the meantime. We’d love to learn more about your company’s unique needs. Link up with King today and let’s talk logistics.