Blockchain offers an opportunity for shippers to redefine standard procedures, leverage new technologies, including cloud-based platforms, and enhance cybersecurity. As explained by Joe McKendrick of Forbes, the power of blockchain derives from its impact of removing intermediaries. Intermediaries may include financial experts, data analysts, freight auditors, and more. Although it may seem counterintuitive for a third-party logistics provider (3PL), like Cerasis, to trumpet such prospects, the resounding impact will drive greater efficiencies in supply chains. In turn, demand for 3PL services may increase, and even 3PL-based platforms, such as the Cerasis Rater, will grow in usefulness. Applying blockchain in logistics and supply chain management is about doing more with less, a common concept in business, and shippers need to know a few things about how it could add value to the shipping ecosystem.
Applying Blockchain in Logistics & Supply Chain Management Lacks Results, At Least Today
The primary barrier to applying blockchain in logistics and supply chain management involves the lackluster number of supply chains currently using the technology. In general, today’s supply chain executives and managers continue using outdated, manual data entry processes, which will increase risk. Even in blockchain, errors in data entry will result in continuous compounding negative effects and incorrect supply chain analytics insight. Meanwhile, supply chains are under increasing pressure to improve accountability and visibility from both public watchdog groups, and regulatory agencies. In fact, the Drug Supply Chain Security Act of 2013, passed by Congress, mandates pharmaceutical supply chains implement an around-the-clock, real-time, and accurate way of monitoring product location in manufacturing and transport by 2023, reports Innovation Enterprise.
Why Blockchain will Create Extreme Supply Chain Management Optimization
Blockchain Could Revolutionize Standard Supply Chain Management
Blockchain’s greatest impacts have mundane origins; blockchain provides a way of validating information and increasing information accuracy. Freight audits will become almost nonexistent as information is tracked to the point of origin, whether it’s the manufacturing location, raw materials used, sourcing of reclaimed parts, or payment processing. According to McKendrick, blockchain automates the invoicing process, eliminating errors that affect up to 10 percent of all freight invoices. Similar ways of applying blockchain in logistics and supply chain management will streamline processes, restore consistency to networks, and promote a stable transportation industry. This is why supply chain executives need to seriously think about how blockchain will impact their operation.
Why Should Supply Chain Executives Consider the Value of Blockchain
Considering the applications of blockchain is a no-brainer, but as any good businessman knows, gaining support for exploring a new technology is about data and fact, not suspicion and intuition. The top five reasons supply chain executives need to give blockchain an in-depth look include:
- Blockchain technology makes navigating carrier-specific contracts easier. With more than 500,00 trucking companies in the U.S., managing contracts with simple office tools is impossible. The volume of companies results in severe inconsistencies in processes, but blockchain would allow any authorized party to review information about a specific activity. For shippers, this could mean the difference between saving $5 and $50 on every shipment.
- Blockchain technology is the pre-requisite to accessing new business models, including new types of payment. Cryptocurrencies dominate the blockchain discussion, and with major companies, including Apple, Microsoft, Amazon, and Google, exploring blockchain payment possibilities, shippers must evolve or face extinction.
- Blockchain is repetitive, ripe for automation. Automation is the most effective way to do more with less in the supply chain, and consumers want their products If teleportation existed, this wouldn’t be an issue. Since it doesn’t, the next best thing is to get to products to consumers within two days, if not two hours, of ordering. Blockchain propagates automation by providing a lengthy source of information and through analytics, consumers can track product movements in real time.
- Blockchain validates information. In modernity, the threats of terrorism, money laundering, and warfare is high, and shippers carry the burden of ensuring purchases, as well as the funds used to purchase items, are not used for illicit purposes. Applying blockchain validates information regarding product use, funding, and purpose to streamline movements. The same process applies to ensure concise, clear communications between trading partners too.
- Blockchain builds on itself. Blockchain technology grows more valuable over time. Built on traceability, the potential insights from big data analytics and increased visibility will add value to the company, reports As an incorruptible resource, blockchain will hold all parties accountable.
Collaboration Is the Precursor to Blockchain; Start Planning Now
The benefits of applying blockchain in logistics and supply chain management are limitless. Shippers can use the technology to increase responsiveness, decrease deadhead, consolidate freight, schedule freight pickup and more. The variety exists, and supply chain executives that take the time to understand blockchains major benefits will be able to achieve what all executives want—the ability to scale profitability and cut costs in their organizations. Of course, some threats will remain, so our next blog will delve into the world of rare, unforeseeable black swan events.