Blockchain technology in logistics

Never before in history, supply chains have been as complex as they are today, which is why transparency is becoming an extremely important issue. For several years now, we have been hearing about the proliferation of blockchain technology, but in addition to associating it with cryptocurrencies such as Bitcoin, the system still seems to be unfamiliar to us. What is blockchain in logistics? What benefits can it bring? Read about examples of the use of blockchain technology in logistics in this article.

All elements of the supply chain management process are extremely complex. They can involve multiple stages, at different latitudes, and often require automated communication between the companies involved in the process, which also need to interact with each other. On top of that, there are all sorts of transactions and payment systems between partners. It is difficult to study these processes in detail, and consequently to evaluate and optimize them. This is where blockchain comes in, which claims that the whole process can be streamlined and made more clear.

What is blockchain?

Blockchain is primarily a technology that allows data to be recorded and stored digitally and in an extremely secure way. This system is very difficult to change or falsify, so security becomes its main advantage. Finally, blockchain can identify each stage of the process and point out irregularities.

You can think of it as a “chain” of blocks, where each block contains some information, and then it is combined with the previous block using cryptographic security. This makes the data very secure and difficult to falsify. This technology became popular with the advent of cryptocurrencies, changing the financial world. It turns out that the same could happen when blockchain becomes a permanent part of supply chain processes.

Examples of blockchain use in logistics and supply chain management

Inventory tracking & management: Blockchain can be used as a system to track products from the very beginning of their sourcing and production, to warehouses, suppliers, and store shelves. Large food corporations such as Nestle and Unilever are taking advantage of this. This allows manufacturers to monitor demand in real time, plan production more precisely and provide customers with information about the origin and quality of products.

Route management: Transport and logistics companies can use blockchain to better manage their operations, routes and fleets, and above all, to track deliveries. This technology provides transparency and security, especially for companies operating in different countries, reducing the risk of fraud, improving delivery planning and the choice of transport methods. This solution will save companies millions by reducing the number errors and delivery times.

An example of a transport company using this technology is Maersk. It uses blockchain-based systems to gain greater visibility and control over international shipments. As a result, their logistics process becomes more efficient, which translates into shorter delivery times, reduced number of errors and elimination of fraud cases.

Secure billing and payments: Blockchain technology significantly facilitates cross-border payments in the logistics industry while ensuring security and transparency. An example is Visa’s blockchain-based B2B Connect service, which helps manage payments by reducing transaction costs and time. This type of solution is used by Tomcar, a vehicle manufacturer from Australia. It makes payments to suppliers using Bitcoin.

Authenticity verification: Businesses and consumers can use blockchain technology to verify the authenticity of products. The purpose of this technology is not only to increase the efficiency of the process, but also to enable better communication with partners. The transparency that blockchain technology offers is crucial for many businesses. It is primarily shared values or sustainable production. This allows for increased trust and credibility, as well as the elimination of counterfeit products.

Thanks to the immutability and security of the blockchain, companies such as De Beers can track diamonds from mining to sale, eliminating the risk of buying “conflict” or “bloody” stones.

Similarly, blockchain is being used by DHL and Accenture, which have jointly developed a system to track pharmaceutical products. In this industry, it is crucial to maintain high safety standards, to avoid falsification of drugs, and this technology enables them to do so.

Similarly, with food safety, the IBM Food Trust project makes it possible for food manufacturers and distributors to track the journey of products.

Dispute resolution: Disputes arise in both small and large companies in the logistics industry. They may relate to missing loads that disappeared on the route during delivery. An example of use is FedEx, which uses blockchain to collect data from shippers, recipients and carriers, which helps eliminate fraud and resolve freight claims.

Regulatory compliance: Blockchain technology also reduces the risk of breaking regulations and standards, as well as the penalties associated with them. This is all thanks to complete records of every process in the supply chain, which allows you to react in real time to changes in the law.

Benefits of implementing blockchain technology in logistics

The key benefit is, above all, the security of the data and the impossibility of falsifying it. Hackers find their task more difficult, as it is hard for them to influence or steal data. This makes it possible to track complete documentation in real time at different stages of the supply chain.

Identifying each stage of the process allows you to find a place where there is a certain inefficiency – negatively affecting the time or damage of the product during transport.

By using blockchain, errors can be significantly eliminated during the execution of various orders in supply chain processes, which would be hard to detect on the fly without the use of this technology. Usually, they are found after some time, when one error affects others, thus generating delays or increased costs.

Blockchain technology facilitates the flow of information, minimizing fraud, errors, and time. It allows you to synchronize your order, shipping, and payment information. Thus, thanks to detailed records, it allows you to track and react faster to any negative actions. This primarily reduces time and costs by minimizing the administrative work associated with the need to track and document data. What’s more, each of the parties involved in the process can track the status of the order on an ongoing basis and, if errors are found, quickly contact their partners.

Blockchain has great potential for the logistics sector. This innovative technology can play a key role in empowering every participant in the supply process, opening up new prospects for sustainable development. It has the potential to revolutionize inventory management, transport monitoring and overall logistics. Through the use of blockchain, the entire supply chain can provide and authorize information, with full confidence that this data is unaltered and tamper-proof.