Blockchain is transforming the business

Blockchain: An era beginsA new technology-driven platform is redefining tracking and transparency processes, making quick inroads in the supply-chain and logistics sector

The world’s leading retailer Wal-Mart uses blockchain to keep track of the meat it sources from China and the blockchain records where each piece of meat came from, where it is processed, stored and its sell-by date. Unilever, Nestle, Tyson and Dole also use blockchain for similar purposes. BHP Billiton, the world’s largest mining firm, is using blockchain to track and record data throughout the mining process with its vendors. Not only does it increase efficiency internally, but also allows the company to have more effective communication with its partners. Closer home, several supply-chain companies and logistics operators are identifying opportunities to provide blockchain-enabled solutions to improve efficiencies and reduce costs for the logistics sector.

The Blockchain advantage

Managing today’s supply chains that can span over hundreds of stages, across multiple geographies, with a multitude of invoices, payments and processes, involving multiple individuals and entities, over a period of months, is extraordinarily complex. Even as manufacturing and distribution has assumed global proportions, the supply chains and logistics network has also become increasingly complex. There is not only an element of inefficiency as vendors, suppliers and logistics operators connect the dots, but it is also difficult to investigate supply chains when there is suspicion of any wrongful practices.

With blockchain, since every transaction is recorded on a block, and across multiple copies of the ledger that is distributed over many nodes (computers); it is highly transparent. Efficient and scalable, blockchain can increase the efficiency and transparency of supply chains and positively impact everything from warehousing to delivery and payment. A clearly defined chain of command is integral to processes, and blockchain has the chain of command built into its very structure. With all entities on the blockchain having the same version of the ledger, there is neither any dispute in the chain regarding the transactions nor can the records on the blockchain be erased, ensuring a transparent supply chain.

The big benefits

Considering the increased interest and the benefits expected to be gained from adoption of blockchain, the shipping and logistics sector is gearing up for wide application of the technology. In fact, several blockchain development initiatives have already been initiated. A significant number of blockchain-based solutions focussing on different challenges are being developed by different players and the benefits of blockchain will be truly demonstrated by the outcomes of its application in the near future.

For starters, the technology facilitates superior tracking which involves authenticating data, which means preventing data tampering, and ensuring performance and maintenance of vehicles. Secondly, automation of operations enables faster processing while capacity observation allows for identification of how much space a shipment occupies to determine the total cost. At the same time, blockchain enables smart contract payments and by eliminating administrative requirements, blockchain reduces cost and makes documents error-free. Stakeholder transactions are also consolidated and stored in a central place.

Blockchain creates solutions that impact all facets of the supply chain, with a particular focus on logistics. Traceability and transparency are the foundations of logistics, and blockchain optimises business transactions and trading relationships with secure and global business networks; to support global trade. Major shipping and logistics players are benefitting from a shared ledger that’s updated and validated instantaneously with each network participant. The results are greater collaboration, streamlined inventory management, and improved asset utilisation.

Setting the standard

In a bid to bring in uniformity for seamless application of the new technology across the spectrum, the industry’s umbrella body Blockchain in Transport Alliance (BiTA) Standards Council Board has launched the first official standard — The BiTA Standard 120-2019 Location Component Specification. This data format specification provides the initial framework for interoperability across a currently fragmented and siloed ecosystem, reaching across enterprises, systems and various protocols. Until now, while the technology was gaining traction, there was no consensus on the framework over which the associated applications could be built, with different companies having different perspectives on what tracking and visibility entails. The BiTA Standards Council is focussed on creating open source and royalty-free standards with an emphasis on data formats and interoperability. The objective is to create a common language for global supply chain businesses to drive efficiencies by eliminating red-tape and increasing machine-to-machine processes.

The way forward

With a world that is becoming more connected on a daily basis, blockchain technology will inherently develop into a symbiotic relationship with the Internet of Things and today’s advanced logistics and supply chain management systems. From shipping companies developing blockchain-enabled systems to operate with ports, to logistics partners migrating their customers to blockchain-based networks; the emerging technology will become increasingly popular in the logistics sector for the big advantage that it brings to tracking and transparency in the business.

Blockchain could make international trade smarter, but smart trade requires smart standardisation — and smart standardisation can only happen through cooperation. If we succeed in creating an ecosystem conducive to the wider development of blockchain, international trade could well look radically different in the next 10 to 15 years.