The promise of an incorruptible ledger for use in transportation management will reduce inefficiencies and create opportunities in supply chains. With the potential of blockchain growing with the interest of software giants, like IBM, more supply chains are turning to blockchain & transportation management with open arms.
Shippers Still Have Problems With Costs and Delays in Transportation Management
The Internet of Things (IoT), well known for its benefits in automating decision making, merges with blockchain seamlessly, but it requires systems capable of communicating. Although the IoT enables machine-to-machine communication, systems still require a means of interpreting and applying data resulting in higher costs of implementation and delays in effective transportation management using new technologies. Moreover, system authenticity problems, as explained by TMW, exist within today’s IoT-based platforms. Without a means to verify authenticity, machine-to-machine communication ceases, leading to lost opportunities. Part of this problem is the result of disparate supply chain parties, which may be competitors, developing technologies independently. This is where blockchain may prove its value.
Blockchain & Transportation Management Provide Better Customer Experiences
The prospects of blockchain & transportation management affect every aspect of the logistics industry, reports the Internet of Things Institute. Blockchain technology works in conjunction with IoT-based systems to provide shipment data, catalog information, and guarantee information accuracy. Blockchain-powered smart contracts allow for enforcing of rules and enhance clarity in communications between parties, as well as machines. This might seem like myriad benefits, but they combine to form a single, best-case outcome—better customer experiences.
An Introduction to Blockchain and Its Potential Benefits and Drawbacks in Supply Chain Management
Consider the Blockchain in Trucking Alliance (BiTA). BiTA is comprised of industry leaders and experts working together to make the convergence of IoT-based technologies, blockchain & transportation management platforms achieve verifiable, accelerated results. Going back to the independence of technological development, blockchain acts as a resource for companies working on improving technologies and sharing information appropriately. This is one of the primary goals of the BiTA, and since blockchain rests on a foundation of trust, the data in blockchain is flawless.
How Does Blockchain Technology Improve Transportation Management?
Blockchain technology has wide implications for improving transportation management, but as a new technology, it is difficult to understand how a ledger leads to benefits for the supply chain.
For reference, some of the top benefits of blockchain for transportation management include the following:
- Blockchain technology provides better accountability with transportation management providers, systems, and contractors. On average, discrepancies between expected freight invoicing and incorrect invoice details can be as high as 8.8%, but some companies may experience error rates of up to 10%. Depending on the volume of freight, this could amount to hundreds of thousands of dollars in erroneous charges and lost opportunities.
- It eliminates the need for more back-office staff to support transportation management. Part of effective transportation management is about reducing internal costs where appropriate, and outsourcing freight invoicing can save an average of $11 per invoice, considering review time, verification, and completion of payment. Blockchain could automate this entire process. Greater security of blockchain encourages trust between supply chain partners and networks.
- Carriers have access to more information regarding demand, making forecasting more accurate. Better forecasts translate into better load planning, effective use of freight consolidation opportunities, and analysis of the most cost-effective means of transport, including multi-modal transportation. Available trucking capacity can be identified and rerouted to meet sudden demand changes, essential in omnichannel supply chains.
- ELD implementation and fleet maintenance are ripe for blockchain use. The ELD mandate is already giving shippers and carriers problems, and HOS violations could cost thousands. However, it is not always possible to ensure drivers adhere to these regulations, and blockchain can help supply chain managers hold drivers’ feet to the proverbial fire. In addition, better tracking of shipments and trucks improves maintenance planning, reducing breakdowns and increasing ROI.
The Impact of Blockchain & Transportation Management Will Encourage Savings to Ricochet Between Supply Chain Partners
The pairing of blockchain & transportation management technologies will lead to greater adoption of the technology, alignment of business goals with actions, improved shipper-carrier relationships, as well as business-to-business sales, and reduce worry over competitive advantage between partners. Blockchain is incorruptible, keeping supply chain leaders informed with accurate information. It’s a win-win for all parties involved, and the ability to bring systems together will help companies realize greater savings through increased equipment uptime, decreased maintenance, and ongoing process improvement.