The blockchain is the underlying technology powering Bitcoin and most other crypto currencies. This is only the first use case of the technology, several more use cases and applications are being tested at the moment.
A major sector in which blockchain technology could have a big impact is Supply Chain Management. Ocean freight accounts for roughly 90% of all goods in global trade. Despite this, transportation in its current state is remarkably dependent on paperwork that hasn’t been securely digitized. Shipping information passes through numerous different companies and contractors, increasing the potential for delays. A late approval or lost form could leave goods stuck at a checkpoint or port.
Commercial financing underlies the movement of goods across the world, and is also one of the primary causes of disputes in this sector. Blockchain enabled supply chains will drastically improve dispute resolution and settlement in commercial financing.
Blockchains create decentralized immutable ledgers – networks with no single point of failure, making the information safe from tampering or hacks. The ledger is decentralized, meaning it is maintained by numerous parties. An immutable ledger can adapt very well with tracking goods as they move from producer to point of retail, recording all the changes in ownership along the way. The blockchain will enable equal visibility of activities and reveal where an asset is at any given time. Harnessing the power of blockchain technology can unlock several options for companies in the logistics space.
Using blockchains in supply chain management will enable industry professionals to gather tracking data and putting it to use in dynamic new ways. Entries in a blockchain database can be used to queue up tasks such as allocating the next batch of goods arriving in a port to a certain dock or container area. All parties will have end-to-end visibility of the goods being tracked, through the supply chain. Timestamped entries into the blockchain records, coupled with smart contracts and digital payments can lead to phenomenal efficiencies being reached in supply chain management.
Early movers in the space who offer enterprise solutions are Factom, IBM and Skuchain. Factom provides a proprietary documentation verification system that authenticates any essential documents, this can be used for logistics related documentation. IBM has announced that it will be partnering with Maersk to create a blockchain-based shipping supply chain firm. Skuchain helps buyers control their inventory procurement across partners. Hyperledger has used its Sawtooth distributed ledger technology to bring add traceability to supply chains in the seafood industry. Another firm called Everledger has focused on deploying the blockchain in the supply chain of diamonds and other ethically sourced bridal jewelry. Everledger has also launched a bespoke blockchain for colored gemstones. UPS and FedEx have been experimenting and testing blockchain based solutions privately for their own logistics needs.
Shippers will be able to track costs and capacity, estimate delivery times for multiple routes and be able to make much more intelligent decisions. Meanwhile transport providers can post details about available capacity and routes, further helping optimize the time and cost for every shipment.
Blockchains deployed in this space can help reduce fraud and errors, reduce delays from paperwork, improve inventory management, identify and resolve issues faster and lead to greatly increased consumer and stakeholder trust.
There are many companies experimenting with blockchain in different supply chain use cases. It is an exciting time in an industry that has not seen major advances in technology in decades.