Blockchain has recently been buzzing on news sites and filling conversations across the globe. As it makes its way onto the screens of our devices, and occupies portions of our discussions with friends, family, and acquaintances, there is a certain level of mystery that shrouds this new technology.
At its basics, it is encryption tech that was developed to alleviate the concern and mistrust surrounding financial transactions. Blockchain technology consists of data blocks that constantly grow with each exchange of currency. These blocks record collections of transactions (ex. purchasing a car), and circulate the data across multiple computer systems, which then becomes public record. This could be hundreds, or perhaps thousands of them. A simplified version of blockchain can be found below, courtesy of G2 Crowd
This differs from the traditional storage of data (one centralized computer), as now the data is secured in multiple storage centers. While blockchain technology is decentralized, the systems operate in harmony, with each of the databases collecting the same data as the other when a transaction is made. To maintain privacy standards, blockchain utilizes cryptography, which is a mathematical method that keeps data hidden and protects identities. This protection is easily demonstrated through a concept called “hashing.” This translates sensitive data into a random collection of arbitrary characters, making them incomprehensible for would-be hackers.
Enough about the blockchain processes. Let’s get to the nitty-gritty, and how this technology could revolutionize the logistics industry.
Logistics is defined as “the detailed coordination of a complex operation involving many people, facilities, or supplies.” The word to focus on is complex. A simple word, yet it barely scratches the tip of the iceberg regarding the intricacies involved with the product shipments. In a nutshell, the logistics industry can be broken down to four major players.
During the process of managing these people/places/things, several roadblocks may present themselves. The lack of information and control of materials in a supply chain are enough to keep any logistics company stakeholder up at night. This is a problem experienced by ~40% of global producers, according to KPMG. In an effort to reduce the negative effects of these uncontrollable factors, logistics companies are considering the implementation of blockchain as modern technological alternative. Doing so would enable these logistic service providers to monitor the entire supply chain from the moment a product is shipped, to the final destination, a customer’s doorstep.
The technological advances associated with blockchain could result in monumental shifts for the industry. Among the many hurdles that present themselves, these three are the most avoidable using modern technology.
Monitoring and Accuracy of Records
By implementing a blockchain system, it is guaranteed that each milestone of the transportation process will be recorded and documented. Not on just one centralized computer, but across hundreds (if not thousands) of them. The main benefit is complete transparency, allowing both shippers and receivers the ability to monitor the transportation process from shipment to delivery. In the end, this will drastically reduce the number of complaints, refund requests, and miscommunications that are associated with traditional shipping methods.
Peace of Mind
A clear benefit of using blockchain is the encryption tech of location data, which considerably increases the ability of all parties to track the progress of shipments. In addition to visibility, this will also significantly reduce the amount of cargo theft. Blockchain brings accountability to each step of the procurement process, making it extremely difficult for criminals to rob product without being caught. Not only will this reduce theft, but it will also remove any doubt that carriers and shippers have regarding the integrity of their partners.