Making Sense of Blockchain in Logistics & Supply Chain

Blockchain is now emerging as a possible solution to many of the challenges faced by global supply chains. From improving efficiency through reduced paperwork and process automation to increasing transparency and traceability of daily operations, blockchain indeed has many potential advantages in the logistics space. While that is the case, many of us – including professionals – are still struggling to make out if, and how, this technology can serve the needs of different organizations in the industry.
In the latest episode of our “Unpacking E-Commerce Logistics” series, we sat down with Wolfgang Lehmacher, a global thought leader and practitioner in supply chain and logistics, to understand how blockchain works in logistics and supply chain. What exactly is blockchain technology and what are their real and practical implications for supply chain leaders? Let’s find out!
Defining Blockchain Technology
Blockchain, in the broadest sense, refers to “a distributed, immutable ledger technology that can record transactions between parties in a secure and permanent way”. Wolfgang, on the other hand, defines it simply as an endless database consisting of immutable records built in a chain. Since the data is distributed across multiple nodes or computers, if one wishes to modify any one component, one must simultaneously hack the systems that are part of the network.
According to Wolfgang, the idea behind blockchain is to cut out the middleman and still have a secure and democratic community of actors that can transact with each other on the basis of trust; they know that the records cannot be counterfeited, manipulated or duplicated. Moreover, blockchain does not usually come in isolation; it is frequently packaged with other advanced technologies. Artificial intelligence and the Internet of Things (IoT), for instance, are just some of the more commonly known ones that come bundled with blockchain applications and solutions.
Blockchain’s Applications In The Logistics Industry
Enhance Transparency
Globalization has resulted in a greater demand for transparency in recent years. In fact, many consumers have begun to question the provenance of the product that they purchase and consume. In this case, blockchain technology is able to store product and producer identities with an immutable QR code leading to trusted places that contain all the information about any given product, from the ingredients used to where and when it was produced. Using smart packaging, QR codes (can be created easily using a QR code maker) can also be easily incorporated into the products displayed in stores to help customers make more informed purchase decisions.
Digitize Your Documents
Next, the use of blockchain-based solutions can reduce risks associated with the digitization process. One of the early developments driven by companies like CargoX was the digitization of the bill of lading (B/L) and production of an electronic bill (eBL). Last year, three shipping lines namely MSC, Hapag-Lloyd and ONE started issuing the eBL based on the blockchain platform of Wave BL. Based on estimates of the Digital Container Shipping Association (DCSA), the maritime industry can potentially save more than $4 billion per year if 50% of eBL adoption is achieved by 2030.
Ensure Compliance
Given its superior security (more so than a conventional database at least), blockchain can also enable trust and improve compliance. During the discussion, Wolfgang brought up the business of diamonds. For items like diamonds that have very specific characteristics, blockchain technology can prove extremely useful. This is because blockchain not only helps to verify provenance and sustainability claims of the diamonds, it also ensures that customers are not purchasing conflict diamonds.
How is Blockchain Transforming The Supply Chain And Logistics?
Firms that deal with transactions and payments are likely to have a blockchain component in their solutions, which adds an extra layer of security and trust. As a result, the blockchain will streamline the entire payment system.
We can see the value of blockchain in the process of digitizing the classic letter of credit (LC) which is an expensive and time-consuming trade finance instrument. So, trade finance is frequently out of reach for many micro and small firms. Digital instruments can help banks to assess their risk. Furthermore, it takes about one or two weeks to process a letter of credit. But now this can be brought down to about five or four hours which is a major gain. Also, we will no longer need to send paper documents around anymore, as the LC is processed on blockchain-based platforms.
A smart contract is yet another unique feature of blockchain technology; it is a piece of software that is activated by particular triggers, for example signals transmitted by IoT devices attached to a container or the products themselves. The smart contract may then arrange payment without human interference when predefined parameters are satisfied, such as when the merchandise crosses the equator and the IoT devices transmit that information to the platform.
For the full discussion, check out the video below. You wouldn’t want to miss it!
About Wolfgang Lehmacher
Wolfgang Lehmacher is a global thought leader and practitioner in supply chain and logistics, with decades of experience in the industry. Previously, he has served as the Head of Supply Chain and Transport Industries for the World Economic Forum, as well as in other large logistics organizations such as La Poste and TNT. On top of his regular contributions to numerous publications, Wolfgang is also a frequent public speaker at various events worldwide, one of them being the Global Leadership Lecture Series at MIT.
About Unpacking E-Commerce Logistics Series
Unpacking E-Commerce Logistics brings together some of the best experts in the e-commerce logistics and supply chain space to unpack key concepts from a variety of trending topics, ranging from the use of Artificial Intelligence in the industry to embracing hyperlocal delivery in the e-commerce world. An integral part of this series are our 30-minute long Fireside Chats where we ask our thought leaders questions about not just the topic at hand, but also their career paths, challenges they have faced, and even their future plans.
For more exclusive reports, insights, and interviews on the latest updates in e-commerce and logistics, follow us on LinkedIn or join our community as a member.
Also worth your time
Track your parcel here
Event Highlights
North America
Logistics & Supply Chain
Home Delivery World
Aug 31 - Sep 01, 2022 | Pennsylvania Convention Center, Philadelphia
Europe
Retail & E-Commerce
Paris Retail Week
Sep 20 - 22, 2022 | Paris Expo Porte de Versailles
Europe
Retail & E-Commerce
Savant eCommerce Copenhagen 2022
Sep 20 - 21, 2022 | Radisson Collection Royal Hotel
North America
Logistics & Supply Chain
Leaders in Logistics: North America 2022
Sep 26 - 27, 2022 | Marriott Crystal Gateway, Arlington VA
Europe
Retail & E-Commerce
eCommerce Expo UK 2022
Sep 28 - 29, 2022 | Excel London
More discoveries
Funding Roundup: Major Wins for CleverTap, Locad, ReturnLogic and Others
Aug 12, 2022
PR Newswire: Purolator Transforms Transportation Sector With Its New Sortation Facility in Toronto
Aug 12, 2022
Alcott Global Podcast: Carbon Neutrality in a Shipping Company
Aug 11, 2022
FreightWaves: FedEx to Apply Peak Season Surcharges As Early As September
Aug 11, 2022
E-Commerce Logistics Race in Latin America: Which Country Performed the Best in H1 2022?
Aug 10, 2022
The Business Times: A.P. Moller - Maersk Purchases Martin Bencher Group for US$61M
Aug 10, 2022
Funding Roundup: Bizongo, Homzmart, Vetted and Others Secured Early-Stage Deals
Aug 05, 2022
How Peak Season 2022 in Europe Might Look Like
Aug 05, 2022
TechCrunch: Shopify Invests $100 Million in a Marketing Automation Startup, Klaviyo
Aug 05, 2022
ITLN: Xpressbees Names Suraj Bangera as Senior Vice President of Cross-Border Business
Aug 04, 2022
Retail Dive: Amazon Launches Same-Day Shipping for Pacsun, GNC, SuperDry, and Diesel Customers
Aug 03, 2022
E-Commerce Logistics Race in Europe: Which Country Performed the Best in Q1 2022?
Aug 02, 2022
Supply Chain Dive: OnTrac and LaserShip Introduce Transcontinental Delivery Service to Prepare for Peak Season
Aug 02, 2022
Alcott Global Podcast: Importance of Supply Chain in Stationery Industry
Aug 01, 2022
Guest Post: 10 Ways Retailers Can Inspire Customers During Peak Season
Aug 01, 2022
Funding Roundup: Early Funding Rounds Secured by Cartona, DealCart and Others
Jul 29, 2022
Vogue: Glossier Launches into Wholesale Partnership with Sephora
Jul 29, 2022
E-Commerce Logistics Race 2022: Canada vs the United States
Jul 28, 2022
Macau Business: DHL Express Names Phil Corcoran as Australia’s Managing Director
Jul 28, 2022
Top E-Commerce Retailers in the United States 2022
Jul 27, 2022
Logistics Manager: InPost Now Has 4000 Parcel Lockers in the UK
Jul 27, 2022
Marketing Interactive: L'Oréal Appoints Kenny Ng as Regional E-Commerce Director
Jul 26, 2022
Guest Post: Why Logistics and Supply Chain Management Is Important
Jul 26, 2022
Guest Post: 7 Customer Retention Metrics That Allow You to Measure Customer Loyalty
Jul 25, 2022
Alcott Global Podcast: Revolutionizing Offshore Logistics
Jul 25, 2022