Use of Blockchain in Supply Chain & Logistics: Looking to Examples Across Industries for Better Understanding

The days of managing supply chains through databases and changing information are over. Although blockchain is often related closely to cryptocurrency, it holds great value for use in supply chain management. Even JP Morgan, Microsoft, and Google, reports Jonathan Chester of Forbes, are working to increase blockchain development and innovation, and supply chain leaders need to understand how the use of blockchain in supply chain and logistics will bring about lasting change and improvements in efficiency.

Use of Blockchain in Supply Chain and Logistics Will Put Certain Departments at Risk

As explained by Connor DiGregorio of Industry Week, blockchain technology carries a degree of risk for traditional supply chain departments. Recordkeeping, accounts receivable and payable, financial services, auditing, and compliance departments are likely to grow less important as blockchain matures. This means that dozens, if not hundreds, of workers will need transfers to other roles, creating added stress for supply chain leaders. The added value from reducing the need for these departments through blockchain is significant, but there will be pushback from employees that wish to stay in their positions. Supply chain leaders must weigh the pros and cons of implementing blockchain solutions and consider the enterprise-wide impacts, like better productivity to increase wages, reduced shrink, and better maintenance schedules tool.

An Introduction to Blockchain and Its Potential Benefits and Drawbacks in Supply Chain Management

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The Applications of Blockchain Are Growing, And Supply Chain Execs Need to Know Where to Look

The applications of the use of blockchain in supply chain and logistics platforms are under development, but 2018 is expected to be the year when such technologies reach the masses. Blockchain is entering a phase of development that will affect every aspect of supply chain and logistics management, ranging from procurement to forward logistics and beyond. Reverse logistics will also see significant strides in efficiency and productivity through the power of blockchain technology, establishing credibility and remaining a vital part of modern supply chain success, regardless of what happens with Bitcoin.

Examples of Real-World Use of Blockchain in Supply Chain & Logistics

Some examples of application and use of blockchain in supply chain and logistics, reports DHL, include:

  • Citizen Services – Blockchain technology can be used to verify the identity of individuals, and it is already in use by ID2020, helping those without access to a physical form of identification to verify their identity. Additional applications may hold value in eliminating certificate of identity forgery, which may be used in the supply chain to verify citizenship, eligibility to work and more.
  • Retail Blockchain – Applications of blockchain technology in the retail supply chain go back to the sourcing of a product, validity, sustainable practices during manufacturing, movement through international trade, returns management, and recycling or reclamation of raw materials. For instance, Martine Jarlgaard and Provenance are working toward this process in the fashion industry.
  • Life Sciences and Healthcare – The life sciences sector includes the use of blockchain to track medical devices, medications, and even personal health records. Since many medical devices and products may be made for a specific person and highly customized, the ability to track the process of manufacturing, delivery, payment, and continued service, such as repairs, will enhance treatment outcomes in health care. In fact, the CDC is currently testing blockchain programs for this purpose.
  • Automotive and Manufacturing – The automotive sector is another area that can benefit from blockchain, particularly the reverse logistics chain, including repairs and maintenance. Blockchain can track maintenance records and enhance vehicle performance and longevity.
  • Facility and Energy Management – The discussion on supply chain use of blockchain is incomplete without touching on facility and energy management, including smart buildings, advanced, integrated warehouse management platforms, and comprehensive energy controls. Blockchain allows for the continuous tracking of information and improvement through data analytics. Since the chain is incorruptible, Facility Managers can verify results against historic records and denote improvements made that result in sustainable manufacturing processes.
  • Labor Management – Labor management also benefits from blockchain technology, particularly employee performance tracking. In a sense, the Electronic Logging Device (ELD) mandate has characteristics similar to blockchain, and moving ELD tracking to blockchain would effectively ensure compliance and hold violators accountable, reducing penalties levied against fleet owners and managers. Companies, like BP, Eni Trading and Shipping, and Wien Energie, have already completed pilot programs for use of blockchain technology to reduce back-office processes and streamline cross-border trade, as well as energy management.
  • Shareholder Voting and Collaboration Between Parties – According to CNBC, Nasdaq has been a pioneer of this example, adding to collaboration and recording thoughts, opinions, and voting among shareholders, thus avoiding time delays in decision making and eliminating inefficiencies.

Staying Competitive Will Demand Blockchain Use

Blockchain is among the most dramatic developments in the modern world. The technology is an incorruptible ledger, which can be applied to virtually all supply chain processes, ranging from inventory management to shareholder proceedings. The impact of blockchain started as a tremor, but it is on track to tear down the walls to effective, transparent supply chain management. For modern shippers, the prospect is too great, and those that hope to stay competitive must embrace blockchain technology in its varying forms now.

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