The supply chain industry has long considered blockchain technology to be the next big innovation for logistics. This is in part due to the enhanced security benefits of blockchains that could potentially save corporations billions of dollars every year. Additionally, blockchains help ensure that products that are received by the end user are tamper-proof. This has led some of the biggest names in the logistics industry like FedEx to develop their own blockchain based supply chain systems. This is an excellent news for the adoption of blockchain technology which is beginning to see mainstream adoption in industries other than finance. Let’s take a look at the benefits that blockchains have for logistics.
FedEx CEO Envisions Blockchain Based Logistics
FedEx CEO Fred Smith, speaking the Consensus 2018 conference said that he sees immense potential in the use of blockchains to better manage supply chain logistics and that FedEx has already begun experiments with high-value cargo. FedEx is the first among freight carriers to be experimenting with blockchain in such a large extent, and this move is likely to give it some edge over its competitors. In fact, FedEx joined the Blockchain Research Institute, an initiative by Don Tapscott to be active parts of the development of blockchain tech and study its impacts on business, government, and society.
FedEx backend is being handled by the Blockchain in Transport Alliance (BiTA), a focus group whose members include rail operator BNSF, JD Logistics, and GE Transportation. BiTA is also hoping to set industry standards when it comes to supply-chain logistics which will make it easier for other players to enter the blockchain space. FedEx is also experimenting with a small Bluetooth-based, low-energy tracking sensor called Tron which is expected to integrate with their new blockchain infrastructure to make the process even more secure.
Benefits of Blockchain Technology
To understand why governments and businesses are looking at blockchains to reform their existing systems, it is necessary to understand what a blockchain is and what it accomplishes. In the simplest terms, a blockchain is simply an untamperable repository of data. To change any information stored on the ledger, all the members involved in maintaining the ledger have to agree to make the change. That property has far-reaching implications for areas which require trust and exchange of information. This leads to a number of benefits that are especially useful for supply chain logistics:
Transparency – By making the data about shipments readily available to all of the steps involved in the shipping process, a lot of overhead costs is saved. Better communication between different parts of the chain leads to more efficient planning and helps take into account any delays or shortages ahead of time. Often the different stages of the supply chain are managed by various organisations that are unwilling or unable to share their data with others. This can lead to delays and mismanagement that can easily be avoided by more open sharing of information.
Authenticity – This is by far the most significant advantage of switching to blockchain for supply chain companies. All of the data appended to blockchains is time stamped and un-tamperable. For that reason, a blockchain can act as a truth ledger in case of a dispute. Consumers can be sure that the products they receive are authentic and manufacturers can be sure that their raw materials have not been adulterated in any way. For example, the food industry is estimated to lose about $40 billion every year due to food fraud. It’s easy to commit food fraud due to the numerous steps involved in the food supply chain from sourcing of the raw material to the final product. This is an area that can benefit immensely if every step of the chain, the information about the shipment is monitored using the blockchain.