What is Blockchain in Logistics and Supply chain?
Business requires information to run better. The faster the information is received, the more accurate and better it is. Blockchain is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members. Anything can be traded through blockchain, it records transactions, tracks assets in a business network and at the same time reduces risk and cuts costs for all involved business or individual.
As Bob Greifeld have said, “Blockchain is the biggest opportunity set we can think of over the next decade or so”. In fact, statistic suggests that by 2026, the worldwide blockchain market will be worth $67.4 billion. Even though blockchain is largely used in cryptocurrency and related fields, it can be of great use in supply chain and logistics as well. A report by research and markets suggests that the global blockchain market in the logistics and transportation sector is poised to increase by nearly $889 million between 2021–2025, at a CAGR of 49.93% during the indicated period.
Similarly, blockchain can be put to use in supply chain systems. Blockchain technology has great scope, therefore, is set to help organizations and business in all industries lower their costs and improve performance by increasing security and visibility to tracking complex variables related to sustainability and proper sourcing throughout the supply chain. In fact, secure information exchange is the most important element pushing blockchain adoption. Improved access to payments and financial instruments is other major drivers of blockchain adoption. Both of which can be used to improve supply chains around the world.
As of 2020, blockchain software solutions were employed the most in logistics (58%), procurement (31%), and supply chain planning (29%), as found by APQC and Supply Chain Management review based on the information provided by supply chain experts. Blockchain software solutions can address various challenges in the logistics industry as well as supply chain industry. Therefore, let us look at some of the use and benefits of blockchain in logistics as well as in supply chain management.
Here are benefits of blockchain in logistics and supply chain.
- Protection from the counterfeit of goods and illegal trading: – Blockchain ensures that none of the data in it can be forged or deleted in the ledger. Therefore, any illegal activities under logistics can be caught easily and the data can be used as evidence.
- Centralize all the data to avoid misplacement-: all the parties involved will no longer have to worry about creating application to store their data. They can simply employ a single blockchain software solution.
- Automating financial transactions-: With blockchain in logistics there are only two parties involved, this reduces complication during transaction as well saves time due to the automatic nature of it.
- Less paperwork and less delays-: As you may know under blockchain reports and documents can be safely stored on the decentralized distributed ledger with data access control. Thus, you’ll save time as no more operation delays. Blockchain also enables digital signatures and provides safe data storage, so, why will someone bother to have paperwork again.
- Great supply chain traceability-: In blockchain, each product is given a digital ID, so that organizations can easily track its way from origin to the hands of customers. The owner history, location, and other data will be available in an application, thus, helping with supply chain visibility.
- Faster data access and better transparency-: Through blockchain you can record and view supply chain data such as the product price, current location, manufacturing date etc easily.
According to a Deloitte poll, 86% of tech-savvy teams feel Blockchain has significant benefits. Even PwC revealed that digital industry champions, which are organizations that were successful in implementing innovative technologies such as blockchain, managed to reduce annual supply chain costs by 6.8% and increase revenue by 7.7.%.
Blockchain driven innovations in the supply chain will have the potential to deliver tremendous business value by increasing supply chain transparency, reducing risk, and improving efficiency and overall supply chain management. Blockchain is poised to disrupt the logistics and transportation industry. Providing supply chain traceability, decentralized data storage, and removing intermediaries from operations, this innovative technology allows companies to protect from counterfeit, prevent data corruption, and significantly reduce costs. In fact, the world economic forum suggests that, eradicating the COVID-19 disease could require the distribution of 7–19 billion vaccine doses across the globe, and blockchain technology is critical for making it possible.
Although blockchain provides the logistics and supply chain sector with many benefits, not every company can integrate it into their system. It’s because progress doesn’t happen immediately while blockchain is a rather new technology, there is still a long way to go but it’s importance can go longer be ignored.