What is Blockchain?

Through decentralization and cryptographic hashing, Blockchain, also known as Distributed Ledger Technology (DLT), provides the record of any digital asset unchangeable and visible.

A Google Doc is a good analogy for learning blockchain technology. When we produce a document and share it with a group of individuals, the document is disseminated instead of being duplicated or transmitted. This provides a decentralized distribution chain in which everyone has simultaneous access to the document. Nobody is blocked out while waiting for another party to make changes, and all changes to the document are logged in real-time, making them entirely transparent.

Logistics industry

Logistics is a multi-trillion-dollar industry that serves as the backbone of almost every global commerce. Yes, the logistics sector is large, and it comes with its own set of difficulties. Handling today's logistics — all of the interconnections that go into making and distributing commodities — is extremely difficult. Today's supply chain comprises hundreds of phases, different geographical locations, a boatload of payments, and invoices depending on the goods.

Impact of Blockchain on the logistics industry

Even though some supply chain management systems provide real-time views of particular data points, each transaction on a blockchain is instantly visible and confirmed by all parties. Blockchain acts as a master ledger for supply chain professionals, allowing all stakeholders to examine data and record all types of transactions. Integrating blockchain technology into a supply chain results in a transparent, secure, and cost-effective solution. Given below is the list of ways in which blockchain technology has impacted and benefitted the logistics industry.

Transparency

More than just the transfer of items through numerous steps, supply chains are complicated systems. The constant flow of information, documents, purchase orders, and invoices flowing worldwide and via government agencies makes current supply chain software difficult to keep up with. On a blockchain, every transaction is instantly recorded and accessible. Contracts, documentation, monitoring, payment, units supplied, and more are examples of transactions and records. It is possible to transact data on the Blockchain.

Security

Since the Blockchain is public and governed by peer-to-peer collectives, its openness helps its security. It's made to keep data and records safe from tampering. When one transaction has been recorded, it cannot be changed without changing all subsequent blocks, which necessitates network majority consensus. This removes any concerns about the books being tampered with.

Cost-saving and efficient system

The open, distributed blockchain ledgers allow all suppliers and vendors to see the same data in real-time. Traditional supply chain operations can be simplified as a result of this. Without traditional confirmations like mail and shipping, documents may be authorized, shipments confirmed, and transactions reconciled instantly on an immutable blockchain database. In paper-based transactions alone, removing paper and mail from the supply chain eliminates delays and saves money. Domestic and foreign auditing may be reduced as a result of the public record-keeping method.

Accountability

The moment a new transaction is logged on a blockchain, the system checks for balance instantly. If it detects an out-of-balance transaction, it blocks the record entry. This simplifies accounting and minimizes errors, replication, and any violations of contract restrictions. Since blockchains are public platforms, each transaction is verified at each touchpoint.

New standards for logistics

BNSF, GE Transportation, FedEx, and other worldwide transportation and logistics corporations are the Blockchain in Transport Alliance (BiTA) members. BiTa's mission is to set common standards for the transportation industry, collaborate on best practices and thought leadership, and educate the logistics business on blockchain technology. This may result in more effective global networking.

Real-time inventory management and asset tracking

Blockchain can be used with the Internet of Things and mobile-based technologies to construct systems for real-time delivery monitoring. Tracking does not have to be done manually anymore; instead, computerized sensors can maintain track of commodities along the entire supply chain, from beginning to end. Logistics organizations can reduce delivery times, enhance transparency in the logistics chain, and closely watch the goods supplied by utilizing Blockchain and IoT.

Small sensors linked to products or objects can help organizations keep accurate and up-to-date inventory. Such intelligent inventories can provide various information about the products, including their previous locations, the length of time they've been stored at the facility, and more. IoT sensors can help simplify inventory auditing, lowering the risk of missing products, poor storage, and other issues influencing overall revenue.

Smart contracts

Every day, $140 billion gets stowed away in transportation payment disputes. It takes a minimum of 42 days to clear an invoice in full, which would be a waste of time and money. A smart contract is a blockchain-based system that enables the automatic legal formalities of supply chain agreements. Smart contracts allow businesses to track the phases in a logistical process and ensure adherence to the transaction's pre-determined criteria, lowering the chance of the other party failing to fulfill a contract.

This is especially useful for allowing minor and less known enterprises, such as startups, to enter the supply chain industry without a prior reputation or references. Smart contracts, by ensuring transparency, can help to mitigate this problem.

Conclusion

The logistics sector is massive and intricate. Controlling the distribution of commodities at multiple levels may be particularly complex due to the supply chain's many phases and geographic regions. Worst of all, this industry includes a great deal of paperwork and invoicing, and if even one piece of paper goes missing, the product's delivery could be delayed.

Companies in the logistics industry are looking for new technology to help them streamline their procedures, decrease costs, and improve supply chain transparency. Blockchain technology has the potential to transform logistics. When combined with developing technologies such as IoT, big data, and artificial intelligence, Blockchain can expedite logistical procedures and improve supply chains. Blockchain is being used by numerous fledgling startups as well as established businesses to achieve a competitive advantage.