Logistics is an integral part of a business’s operations, supply chain, and transportation management. According to a recent report, the global logistics market is expected to reach $15.5 trillion by 2023. While it certainly is a lucrative industry, several businesses miss out on a significant percentage of the profits. This happens because of unnecessary expenses, inefficient practices, and theft. Over $50 million annually are lost due to stolen, misshipped, and mislabeled cargo by businesses. This is where the use of blockchain in logistics comes in.
If used ideally, blockchain technology can change how companies handle their logistics. It can improve processes, and build smoother operations. Here’s how Blockchain technology is revolutionizing the logistics industry.
Why Use Blockchain for Logistics
Integration of blockchain in logistics can help in eliminating supply chain barriers and improve revenues by up to 20%. Blockchain technology allows companies to save time and costs by relying on smart contracts. Smart contracts can help in automating the complete process. By eliminating inaccuracies, and reducing the risks of fraud, blockchain can provide a much-needed boost to the supply chain. Moreover, blockchain makes the supply chain more secure and improves the flow of transactions.
Blockchain Can Improve Logistics
Industry giants like Amazon, Walmart, Nestle, Alibaba, and more are already using blockchain logistics and supply chains. If it can do wonders for them, it can definitely improve your workflow.
All the current systems are centralized which suggests that a hacker can have complete control once they get access. An intruder can alter or erase the information stored within that system.
With blockchain networks, there’s no central authority over the complete system. Compared to any other competitive solution, blockchain increases the degree of security as a third party can’t modify the information stored on the chain. Moreover, blockchain networks can leverage cryptographic security techniques to make it impossible for a hacker to change or erase the data.
Blockchain can improve the way shipping and freight are done. To improve the delivery process, logistics firms can use blockchain for the effective tracking of goods.
By eliminating the bureaucracy in the administrative process, blockchain can improve the efficiency of global trade. The need to involve multiple participants and the enormous amount of paperwork can be replaced by an automated process.
3. Real-Time Asset Tracking and Inventory Management
Blockchain can be integrated with the Internet of Things and mobile-based technologies to build systems for real-time delivery. Businesses don’t have to do tracking manually, as it can be done by digital sensors that keep track of goods throughout the entire supply chain.
Organizations may maintain accurate and up-to-date inventories by using small sensors that are attached to the products and objects.
Blockchain enhances transparency and security, it allows businesses to track the changes efficiently and record them all. Since all the entities on the chain have the same version of the ledge, there’s no conflict about transactions. Thus, processing transactions becomes more efficient.
Once your products are shipped and the smart contracts are signed, the data will be reflected in the public ledger. The data is stored with the information on who made the entry and when. Companies that have access to this ledger can track the goods and see who currently has these goods.
5. Performance History Monitoring
Blockchain allows monitoring of the carrier’s and supplier’s performance history. However, businesses can easily check the performance of individual vehicles within the fleet and record the past performance of particular carriers.
This knowledge allows for making more informed decisions and thus improving the supply chain. Combined with valuable data, businesses can develop faster routes and eliminate unnecessary steps in the shipping process.
6. Smart Contracts
According to a recent report, $140 billion are stuck every day in transportation payment disputes on a daily basis. On average, it takes 42 days to settle in full on any invoice and it wastes a lot of time and resources.
A smart contract is a blockchain-based solution that allows for digital legal binding of agreements along the supply chain. Smart contracts allow companies to monitor the steps within a logistical process and boost compliance.
This is particularly effective in offering smaller and less established companies that don’t have that big of a name in the industry. Because of the level of transparency they offer, smart contracts can fix this issue.
Final Words: How Blockchain Improves Logistics
Logistics is a huge industry and it’s complex. It can be extremely difficult to control the distribution of goods at various levels as the supply chain can run through many stages. Logistics companies all over the world are implementing blockchain technologies to gain a competitive edge over their competitors.