The Hurdles & Current Challenges of Using Blockchain in Supply Chain & Logistics

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Although using blockchain in supply chain and logistics is an exciting prospect, the technology lacks the maturity necessary to enable global deployment today. Such limitation can be discouraging, but it serves as a beacon of hope for a better future in supply chain management. To unlock the true value of using blockchain in supply chain and logistics management, shippers should consider its existing hurdles and possible challenges as the technology matures.

Using Blockchain in Supply Chain & Logistics Comes With Significant Current and Future Challenges

Widescale deployment of blockchain technology in supply chain and logistics management is still out of reach for most shippers. Blockchain technology contains “immutable and transparent attributes,” says Pieter Vandevelde of Supply Chain Dive. A block is formed within the chain when a user completes an action or series of actions, and the block is locked into the chain. The information cannot be changed at this point, so efficiency in entering information is the first hurdle.

Supply chain leaders may be using outdated systems to record information. System sensors and data pools may not be compatible, making data access difficult at best, and blockchain is susceptible to the problem of too much data. Poor data quality entered into the chain will result in inaccurate data assumptions in subsequent chains.

Why Blockchain will Create Extreme Supply Chain Management Optimization

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Another key problem with today’s level, or lack thereof, of using blockchain in supply chain and logistics lies in virtually zero off-the-shelf (OTS) systems. Blockchain technology is still “new,” so few supply chain management software vendors have had the time to develop OTS solutions for use. Plus, another problem still exists; will shippers embrace blockchain wholeheartedly? In other words, the technology’s primary challenge is creating a culture of acceptance, organization, and standardization for its use, reports DHL Logistics.

Blockchain Technology Will Continue to Evolve, Streamlining Use

To answer that question, consider the ways blockchain affects the whole shipping industry. Blockchain technology holds its greatest value in industrywide adoption. Think about pharmaceuticals and products requiring tracking and management of product cycles to ensure viability, safety, and security. These are the areas most likely to see real-world benefits, and major software developers are taking notice. In fact, Microsoft has partnered with Ardents, reports Ana Alexandre of CoinTelegraph, to create a new blockchain technology-based system, including artificial intelligence (AI), to offer end-to-end traceability and visibility into supply chains. The system, known as Ardents NovaTrack, was originally created for the pharmaceutical industry, aimed at reducing illicit pharmaceutical availability and reducing the number of counterfeit drugs on the market.

More than 2 percent of today’s drugs are counterfeit, and although this may not seem like a major problem, the wrong medication could cost someone’s life. It is not a laughing matter, and the onus of ensuring medication integrity depends on stringent supply chain management, visibility, and transparency. This will allow supply chain leaders to document the chain of custody for medications from manufacturing to end-users, which also holds potential in curbing the opioid epidemic. Applying this example across other supply chains, like grocers and sporting goods resellers, could increase sales by making sellers more responsible. Better documentation is tantamount to more sales, better brand value, and fewer compliance violations, but with the limitations of today’s blockchain technology, what can shippers do to plan for success?

How to Overcome Today’s Challenges and Plan for Success

It’s easy to assume the challenges of using blockchain in supply chain and logistics management will be difficult to overcome, but it is possible. Supply chain executives should take these steps to prepare for a blockchain-based future:

  1. Conduct a Business Review. A thorough business review helps supply chain leaders identify their core competencies and weaknesses, as well as prepare for adoption of new technology and software. Since blockchain is on the horizon, knowing where today’s operations stand is the first step in the journey.
  2. Automate Technologies. Blockchain is data and network intensive, so automation will play a key role in allowing for seamless integration of blockchain technologies.
  3. Integrate Systems. Integrated supply chain platforms go back to overcoming the future challenge of consistency in blockchain data. Systems and platforms that aren’t compatible will lead to instability and inaccuracy in the “chain.”
  4. Use Data Analytics. Data analytics is a no-brainer, and supply chain executives should start using data analytics to aggregate and clean data to derive value. The information analyzed will be an integral stepping stone in the path toward blockchain-based processes.
  5. Stay Educated. Blockchain is in a state of evolution, and software developers, like Microsoft, are on the ball. Meanwhile, early adopters of blockchain, including Walmart, will have the ability to radicalize the playing field, generating significant competitive advantages. Staying educated on the use and availability will help minimize the competitive impact of early adopters.

Understand the Challenges to Embrace Blockchain in the Future

The challenges of using blockchain in supply chain and logistics processes will become apparent to small and midsized shippers as the technology grows. By understanding these challenges, shippers can take steps to move existing operations in a pre-emptive strike to leverage the power of blockchain in the future.

In January 2020, Cerasis was acquired by GlobalTranz, a leading technology and multimodal 3PL solutions provider. To learn more, please read the press release. If you are a current or prospective Cerasis customer, we invite you to reach out to us to learn how our combined capabilities can deliver new services, solutions and enhanced value to your supply chain. To learn more about GlobalTranz, please visit www.globaltranz.com.

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