The widespread acceptance of disruptive technologies, including blockchain, has expedited the global trend toward digital transformation. The rise of cryptocurrency has given this invention much more significance. Its application is not, however, restricted to the world of finance. In reality, this instrument’s benefits—security, privacy, and authenticity—are promoting its use in a variety of industries, including real estate, energy, and health. Blockchain technology is also a tool for many supply chain organizations in the logistics industry.
When paired with other cutting-edge technologies, this technology’s use can assist in strengthening global supply chains and prepare them for future challenges. Especially those that speak to a company’s capacity to satisfy customer demands, guarantee operational profitability, and develop more resilience against potential setbacks.
Learn about the many uses of blockchain in logistics and how it affects how the supply chain operates.
How does blockchain work?
The beginnings of blockchain technology can be traced back to the 2008 presentation of the Bitcoin concept by Satoshi Nakamoto. The goal was to develop a decentralized method of conducting business without the need for a financial middleman. However, in order to fulfill his goal, Nakamoto required the correct tool: the blockchain.
To put it simply, this technology is a shared database that records all connected information with each transaction. This registration is completed in blocks, which are connected to one another and to the block before them to form a chain. Additionally, every block has a unique fingerprint or password.
Transactions cannot be altered or manipulated after they are recorded and verified on the blockchain. Its integrity and security are ensured by cryptographic connections.
The fact that an intermediary, like a bank or regulatory body, is not necessary for the validation of transactions is one of this technology’s distinctive qualities. It is acquired through the use of a large, decentralized network of autonomous computers (peer-to-peer network), which synchronizes transactions and uses algorithms to come to an agreement on their validity. With the use of this method, no transaction can be erased, and new blocks can only be added to the chain once everyone has undergone validation.
Complex computational procedures that enable the storage and structuring of the data related to each of these transactions make it all possible.
Among blockchain’s primary benefits, the following are particularly noteworthy:
- Increased transparency because every modification to the blockchain is shared and made public by all of the network’s participants.
- Increased speed because technology makes it possible to share vast amounts of information quickly and up to date.
- Reduced expenses since there are no middlemen required;
- Increased security and decreased fraud risks are a result of the inviolable data record.
The Application of Blockchain in Logistics: Four Major Advantages
Although the development of blockchain was primarily associated with the introduction of cryptocurrencies and decentralized forms of payment, the technology was quickly exploited to record all types of transactions. Additionally, blockchain technology can be used in the supply chain to facilitate direct transactions between different parties, while assuring operational security and compliance.
This technology, for instance, makes it possible to trace a product from its point of origin to the shelves of a retailer. Therefore, blockchain is an effective technology that may help supply chain firms become more flexible, decrease inefficiencies (like the risks associated with delivery delays), cut costs, and streamline procedures (like the amount of paperwork and documentation that needs to be completed, among other things).
In fact, digital documentation and blockchain smart contracts are already being used by the ports of Antwerp, Rotterdam, and Singapore to automate procedures and dematerialize documents. For a number of years, giants like Walmart have also been tracking a variety of products (from pork to mangoes) using this technology.
The four main advantages of blockchain in logistics
Boost traceability and transparency in the supply chain
By using this technology, you can combine all of the data from different supply chain parties and participants into a single source or platform. Operations are completed more rapidly as a result of improved cooperation and communication among various entities. Simultaneously, product origin verification is made simpler and there is an improvement in visibility into the workings of all logistics systems.
Verify the documents’ legitimacy and security
Blockchain technology gives supply chain participants a safe and secure way to share documents and data with each other, as well as evidence against fraud and theft, because of its tamper-proof transaction record.
Decrease the intricacy of logistics procedures
Automation of processes is facilitated by the use of blockchain in logistics. Smart contracts can be used to automate tasks like cargo checks and payments. These systems enable the setting of automated payment upon verification of product receipt, for example.
Enhance the effectiveness of logistics procedures
In addition to preventing transaction repetition, the blockchain’s mechanism of validating information also helps to prevent errors brought on by human error. Process automation also allows for faster operation completion. All of this is for fewer dollars.
Blockchain and other cutting-edge technologies are being used by businesses to enhance partner collaboration, cut costs, gain total visibility over their operations and products, and maintain their competitiveness in an increasingly complex and demanding environment for global supply chain participants.
Reach out to us if you want to improve the agility, automation, and transparency of your logistics processes. We at 3PL Links offer an extensive array of creative and integrated logistics solutions that are tailored to meet the specific needs of every business.