As the world continues to become more digitally focused, the quantity and breadth of digital transactions increases alongside it. Customer expectations have moved from being satisfied with a delivery time of four, five, or more days, to expecting product to arrive within a day or even hours. The market finds itself getting increasingly crowded while also having to move at a more rapid pace. Blockchain has come to the forefront of possible supply chain revolutionizers at just the right time.
What Exactly is Blockchain?
At its core, blockchain is a method to increase the efficiency, visibility, and security of online transactions – – think about what debit cards did for chequebooks. It is simply a new method of recording online transactions, financial or otherwise. Quick note: it is synonymous with Bitcoin but it is NOT Bitcoin; blockchain is the transaction method used to support Bitcoin.
How Does Blockchain Work?
Think of all the different parties involved in the movement of goods. You have suppliers, manufacturers, freight forwarders, port personnel, customs officials, and small parcel networks to name a few. Each of these parties has their own set of documentation, as well as often requiring previous documentation to complete their part of the process. Complications, time delays, human error, customs issues or fraud are not known to the other parties until communicated down the line. What blockchain does is bring all the parties’ information together in one secure, visible and real-time environment. Everyone has the same information at the same time.
The blockchain elevator pitch …. Blockchain is a shared ledger of transactions with defined access and viewing permissions, where transactions are validated by a consensus-based on contractual conditions outlined within the code of the chain (Smart Contract, we’ll get to that later).
What does blockchain look like?
Each block contains a structured set of information:
• An alphanumeric code, or “hash”, that identifies the work carried out within the block.
• A summary of the transactions.
• A timestamp.
• A reference to the hash of the block previous in the chain.
It is the reference to the previous block’s hash that creates the chain, which ensures that no blocks are retrospectively placed in between two blocks thus disrupting the chain. This is the best visual representation of blockchain that I have found:
From Yevgeniy Brikman
I mentioned Smart Contracts earlier back. This is the agreed-upon set of conditions for the transactions in the chain. What is interesting is that external data (e.g. stock prices, weather, news headlines) can feed into the smart contract and modify the chain as outlined in the conditions. Smart contracts are written into the code of the blockchain which develops trusted and transparent working relationships.
How Will Blockchain Affect Supply Chain?
The impact blockchain could have on the supply chain is practically limitless – from simply increasing the visibility of the product in transit, to complete killing off the 3PL industry (hear me out!).
Blockchain unites the supply chain process, where every point of contact is documented and available to permissioned parties in a digital, transparent and real-time environment. This reduces wait times, human error, while increasing visibility, security and speed. It is the ultimate transport management system.
Each piece of information is clearly recorded from the first block; no more questions of “how many” and “what’s arriving.” Each step is tracked and visible; the uncertainty of where something is removed. Certifications are assigned, documented and visible to all parties; streamlining customs communications, or removing any doubt that a product comes from organic or fair trade origins. Blockchain also provides complete transparency in case of a crisis – product recalls can be at the batch level, as every supplier, production date, manufacturer, etc., is stored on a tamper-proof and trusted platform.
Additional benefits include:
• Eliminates duplication of records.
• Reduces the need for costly intermediaries.
• Data is secure and verified.
• Completely auditable data ledger.
Digital innovations, such as blockchain, that increase efficiency have the potential to drive down the cost of supply chains which could have a knock-on effect of reducing the cost of many consumer goods. The secured, regulated and location-neutral basis of blockchain could also benefit industries in developing countries that have struggled with compliance issues and supply chain transparency in the past.
To tie this innovation into the Industry 4.0 movement, there is real scope for smart factories and cyber-physical machines to manage their own blockchains autonomously as a ledger of communication. The deep learning capabilities within the communications, manufacturing and logistics process could push Industry 4.0 to complete “Freight Autonomy.” The 3PL is no longer needed as the intermediary coordinating suppliers, carriers, manufacturers, etc. Blockchain could kill the 3PL!
Change is already taking place. Companies are already moving away from 3PLs for technology-focused 4PLs. At Titan, we don’t wait for change. We ARE the change. Our programs help drive our clients towards the future by incorporating strategic planning with leading-edge technologies. We work beyond four walls to make real, tangible impacts on our clients’ current and future business growth. The possibilities that blockchain brings not only to supply chain but all industries could prove it to be the next big disruptor in how the world works.
Talk to Titan today about how we can transform your supply chain and business.
Call us on +353 61 775 222 or email us at firstname.lastname@example.org for more information.