How Blockchain Will Revolutionize Logistics
Blockchain is a distributed database technology that records transactions in real-time and stores data across a network of computers with a tremendous amount of transparency, security, and no central control authority. The blockchain ledger records transactions from inception to completion and maintains a single online payment entry for each transaction. The peer-to-peer network helps the network to validate each transaction and rewards the community with virtual currency.
The Logistics Industry
Logistics and Supply chain is a trillion-dollar industry that has its reach and network on a global scale. The industry is vast, which employs millions of workers and is now being disrupted by technology to make the processes productive and cost-efficient. The large chain of networks facilitates distributing goods from various geographical locations, collecting payments, generating invoices at multiple stages, and delivering goods to the end-user.
The value chain consists of various stakeholders managing tasks of collection, transporting, and delivering. The traditional supply chain is very complicated and unorganized in multiple ways. In this extensive network, various shipments get damaged, delayed, lost, contaminated, and creates inefficiencies for the entire value chain. With digitalization, companies can discard pen and paper invoicing and document management and create value for all stakeholders from a single dashboard.
Importance Of Blockchain In Logistics
Blockchain technology emerged as pioneer technology, which started to transform the financial sector through cryptocurrency, which is a faster payment network compared to fiat money, but without any central authority. Reports suggest that Blockchain has the potential to become as vast as the internet with an equal amount of change on humanity. Blockchain records transactions between two parties securely and allows them to exchange goods and services for cryptocurrency.
Blockchain adoption is growing by leaps and bounds globally, and even the big four technology companies, including Facebook, Google, Microsoft, and Amazon, are adopting Blockchain technology at a faster pace. A report by Markets and Market estimates that Blockchain in the supply chain industry is expected to grow from 145 million dollars to a 3.3 billion dollar industry by 2025. Domino’s Pizza has also announced that it will implement Blockchain in logistics management in countries like Singapore and Malaysia. With over 260 stores in these countries, Domino’s has more than 4000 people working in the restaurants and as delivery partners.
Benefits Of Blockchain In The Supply Chain
A survey by Gartner suggests that only 1% of CIOs report that they are investing in Blockchain for transforming the supply chain. There are various benefits when Blockchain is implemented in Logistics and Supply Chain.
Transparency
The lack of transparency in the logistics industry requires Blockchain technology to allow stakeholders to track deviations in the value chain. With the immense amount of transparency blockchain provides, transactions can be recorded on blocks and distributed over various nodes (computers). This information can be accessed by anyone and is stored in a single place. Everyone on the blockchain can easily view the ownership of an asset, and no one can manipulate the data in any way once it’s recorded. The data also cannot be deleted, which makes it a perfect tool for a transparent exchange.
Reduced Transaction Costs
Due to paper transactions, processing and administration costs takes 20% of the overall expenditure in logistics and supply chain. Supply chain startups are adopting cloud computing and blockchain-enabled solutions to reduce their cost by digitizing the supply chain. As logistics and supply chain is a thin margin business, Blockchain is helping companies to increase their profitability and impact by making it faster and productive.
Faster Transaction Settlements
Blockchain provides faster transaction settlements as there is no third-party, intermediary authority to accept the payments. The peer-to-peer network allows the nodes to authorize payments automatically, which makes the processes more efficient, faster, and helps in quick delivery of goods and services through mutual trust among all participants of the Blockchain.
Eliminating Inefficiencies
Blockchain is emerging in the world of logistics, supply chain, transportation, and is the answer to the various inefficiencies in the sector. The industry struggles with multiple transportation mediums and carriers, which are always on the go, and it becomes difficult for enterprises to track the location of the goods, which leads to creating hassles for the entire value chain. The Blockchain technology makes approvals and custom clearances faster and efficient with the use of smart contracts. Organizations are always looking for secure and reliable data methods to make decision making more efficient. Blockchain enables data authentication throughout the network for the entire transportation and logistics landscape.
Traceability and Audits
Blockchain makes transaction verification and checking processes automated by securing all transactions in a block. Customers can track their products and goods on the ledger and instantly opt for tracking and verification. It also helps in matching the quotations to invoices and manage inconsistencies and reconciliations between them. As the modification of data blocks is impossible, the audit process can eradicate the chances of fraud.
Worldwide Adoption
Since 2010, Blockchain is majorly used in financial trading, but the features of Blockchain, including verification, recording, and tracking, are deeply appreciated by the supply chain industry and various other industries as well. The mass adoption of Blockchain can transform transportation and logistics by helping to create a universal standard for easy flow of money, decision making, and catch fraud in a matter of time. This also helps in cross border insurance in shipment tracking. As enterprises can completely digitalize their business processes through smart contracts, it can help companies to become more productive and increase their revenue.
