Created on May 4, 2022
Trust, security, tracking, real-time visibility, and transparency are rapidly becoming critical aspects of everyday logistics operations. To improve business outcomes, create greater loyalty among logistics partners, eliminate cost leakages and boost profitability, supply chain-powered businesses will increasingly focus on leveraging Blockchain.
Blockchain is a technology that fits the bill perfectly with its decentralized nature, immunity to tampering, and inherent transparency at every level.
Here we explore how Blockchain improves traceability, security, transparency, and efficiency in global supply chains and makes them more profitable.
eCommerce involves multiple locations, multiple parties, and multiple facilitators. This can breed discrepancies leading to operational inefficiencies, improper integrations across different management systems, and redundant operational workflows.
Blockchain allows for digitization and automation on shared network infrastructure, thereby improving communication and collaboration for all parties. There is lesser reliance on manual processes, and import and export documentation and customs navigation become automated and auditable.
Blockchain offers traceability and transparency that help eliminate duplicate orders and accounting frauds, such as invoice frauds and fake expenditure bills.
Smart contracts ensure stringent contract compliance contingencies for timely and fair cash reconciliations completely and accurately. Data silos no longer exist, and every stakeholder at every level has access to the relevant data.
This brings us to the next use case.
Statista reports visibility as the biggest challenge in the B2B supply chains (33% of supply chain stakeholders agree). Research shows that the global spending on digital transformation in logistics will amount to 75.5 bn USD by 2026, and the global supply chain management market is growing at a CAGR of 10.7%.
Yet, only 6% of companies report full visibility over their supply chains.
Blockchain facilitates a predictable, verifiable, and secure exchange of information at every level that improves visibility across the entire supply chain.
Blockchain readily integrates with other innovative technologies, such as IoT, RFID, process automation, smart sensors, etc., to improve visibility throughout the value chain.
What makes the application so excellent is the ability to offer visibility with abstraction. Every party has full visibility only to those data and information that are relevant to their role and position in the supply chain.
So, while the shipment number is accessible to all, what everybody can use that shipment number for, is limited and specific to their role.
Traceability is often confused with visibility. However, it has different meanings for different stakeholders in a supply chain. Also, it plays a crucial role in driving meaningful customer experiences.
One epitome is the ability to trace the origin of all the ingredients of a consumable via a simple scan of QR printed on the packet. These offerings and services have become essential in the light of increasing customer demands in the gourmet and specialty food sector.
However, traceability is not only limited to ingredient sourcing. Currently, customers and retailers rarely have real-time access to crucial details, such as:
In manufacturing B2B supply chains, traceability becomes of paramount importance as the manufacturers wish to know the exact source of their raw materials. Knowing the exact source and time of manufacturing these raw materials helps plan the store-to-shelf journey in a better manner.
Blockchain is a transparent and decentralized ledger that is non-corruptible, non-repudiable, and immune to change. Hence, it is a perfect platform to ensure compromise-proof and end-to-end traceability across the entire supply chain. Real-time tracking, visibility into shipment health, and Geolocation-based tracking are some other applications.
Brands are already using it for strategic sourcing opportunities, capturing more ethical sourcing of raw materials and EDI solutions.
Currently, every stakeholder maintains a ledger for recording business transactions. Apart from being vulnerable to distorted accounting, fraud, and accounting inefficiencies, the system crumbles down if a central banking institution crashes.
Cyberattacks, frauds, and shipment manipulations during transit can also lead to financial fiascos in global supply chains.
Blockchain-powered transactions are extremely secure, efficient, and transparent. Every party shares the latest updated copy of a universal ledger, and every transaction is updated via peer-to-peer replication.
Also, each party can see only the relevant parts of this universal ledger, and all the transactions are verifiable, secure, and authenticated.
Another excellent feature of blockchain is enforcing terms and conditions via smart contracts. These contracts ensure bias-free asset transfers in the network via tokens.
Hence, the copious T&C documents that are subject to loopholes and compromise are no longer required.
Blockchain ledgers are the single source of truth for all the parties and transactions in a network. So, they can also instill financial trust and transparency in the complex supply chains with multiple parties involved.
This solves the trust and transparency issues for:
Using Blockchain in global supply chains can reduce costly supply chain intermediaries by automating complex negotiations, comprehensive data synchronization, and peer-to-peer verification.
Procurement is one resource-consuming process that involves discount negotiations, business partners, operational subsidiaries, etc. The blockchain ledger is fair, incorruptible, and always updated. So, real-time data collection from business partners, tracking purchase volumes, and ensuring volume-purchase benefits become cost-efficient.
Blockchains also eliminate the need for auditors and save costs across price-verification processes.
Using Blockchain with technologies such as AI, ML, and Big Data will facilitate better forecasting data for money-wise inventory management, reducing the holding costs of inventory, which comprise 15 to 40% of total costs.
While the urge to steer global supply chain operations toward efficiency, data-driven workflows, and transparency is strong, implementation requires careful technology aggregation.
This is because the segment’s industry expertise is maturing, and fulfilling flawless and seamless aggregation of blockchain systems in legacy supply chains is resource-intensive.
So, the best option is to take one step at a time and get started for digitization preparedness by consistent and smart automation adoption. Also, it is important to look for alternative solutions that are cryptographically verifiable and scalable.
Check out the last mile delivery trends that will revolutionize supply chains in 2022: click here.
At Shipsy, we use AWS QLDB for standalone ledger database management as an append-only ledger database. This immutable journal tracks change history and offers full visibility into data lineage. It also allows the ledger owner to configure access rights and make all the changes cryptographically verifiable.
Successful implementations of our internal POC on AWS QLDB have shown that it perfectly fits Shipsy’s logistics use cases.