Money and attention is being invested in the possibility of a blockchain-based future for supply chains.
A report courtesy of DHL and Accenture indicates this. The author’s of the study believe, despite the hype crowding blockchain tech, “that the logistics industry needs to leverage new technologies and embrace ways of rethinking old processes in the digital era.”
The author of the report suggested that bringing blockchain tech to supply chains would cut out intermediaries, calling the tech “The New Internet.” The tech could be used for verification, recording, and coordinating transactions in an autonomous process without third parties. Essentially, the global supply chain operations would see layers of complexity eliminated from operations.
“Already many projects are underway to apply blockchain technology to global logistics, adding value by boosting supply chain transparency and automating administrative operations,” the DHL-Accenture team writes in the study. “Imagine how the physical flow of goods can be more effectively orchestrated and synced with information and financial flows when blockchain is combined with the IoT, artificial intelligence, robotics and more.”
Here are the benefits the DHL-Accenture team sees in the application of blockchain to supply chain:
Driving Greater Automation: Bureaucracy and paperwork can be reduced by a considerable degree using blockchain. As the report’s author points out, ” up to 10 percent of all freight invoices contain inaccurate data which leads to disputes as well as many other process inefficiencies in the logistics industry.” Rather than a cumbersome paper trail, blockchain offers “an automated process storing information in a tamper-evident digital format.”
Automation can extend to complex fields such as legal, brokerage, settlement services, outsourced transportation management, route planning, delivery scheduling, fleet management, freight forwarding, and business partner connectivity.
Blockchain would serve as a convenient way to keep track of the lifecycle of a product from manufacturer to end consumer.
Build new business models: “Micropayments, digital identities, certificates, tamper-proof documents and much more can be introduced and radically improved using blockchain-based services,” the report’s authors write.
Smooth out friction in global trade: “The logistics behind global trade is highly complex as it involves many parties often with conflicting interests and priorities as well as the use of different systems to track shipments,” the authors wrote. It offered the following example: “a simple shipment of refrigerated goods from East Africa to Europe can go through nearly 30 people and organizations, with more than 200 different interactions and communications among these parties.” Blockchain would offer a solution to many of these frictions, “including procurement, transportation management, track and trace, customs collaboration, and trade finance.”
Better transparency and traceability in supply chains: Blockchain powered supply chains can “amass data about how goods are made, where they come from, and how they are managed; this information is stored in the blockchain-based system. This means that the data becomes permanent and easily shared, giving supply chain players more comprehensive track-and-trace capabilities than ever before. Companies can use this information to provide proof of legitimacy for products in pharmaceutical shipments, for example, and proof of authenticity for luxury goods. These initiatives also deliver consumer benefits – people can find out more about the products they are buying, for example, whether a product has been ethically sourced, is an original item, and has been preserved in the correct conditions.”
Here are the recommendations the report made for blockchain supply chain success.
Foster a Collaborative Culture: Collaboration between stakeholders was described as the key to blockchain success in the report.
“Success depends on all parties working together to transform legacy processes and to jointly adopt new ways of creating logistics value.” This collaboration can happen internally, between partners, and through industry consortia. “When a company agrees to work with blockchain technology, it is signing up for an intensely collaborative endeavor. This is because a huge part involves facilitating trusted collaboration between multiple parties including both public and private entities of all kinds – government agencies, industrial organizations, regulators, partners, and even competitors.”
Develop blockchain knowledge and abilities: Training will be a key part of implementing this new technology. Offer partners and individual contributors “the time, tools, and resources they need to successfully contribute to each blockchain project,” the report says.
Expectation management: “Set realistic expectations and acknowledge that blockchain technology remains in an early phase of the software maturity lifecycle,” the report said. “It has yet to be applied at scale.”