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Blockchain: A Potential Improvement to Supply Chain Performance?

Wednesday, December 12th, 2018

You are probably aware that managing a supply chain and all the intrinsic links involved in the distribution of goods and services is an extremely complex process. Even using costly software that can track orders and shipments, there is still only limited visibility and insight on where a company’s stock is at any given time due to gaps that exist within the supply chain.

Enter Blockchain

Blockchain is an emerging technology that has the potential to increase security, improve transparency, and upscale the entire length of the supply chain.

Blockchain is the technology behind bitcoin and other cryptocurrencies. It’s the incorruptible digital leader which can record all types of information including a business’ transactions, purchases, sales, contracts, money transfers, and so on. It stores information in a series of secure and permanent identifiable data files called blocks; now the name begins to make sense.

Each new block gets linked back to previous ones, creating a series of tamper-proof, chronological ledgers that can be hosted by a million computers simultaneously. As the blockchain’s database isn’t in one single location, rather, hosted globally, the records are both public and easily verifiable.

The unique difference between blockchain and other spreadsheet ledgers is that information can only be added, it cannot be amended or deleted.

Integrating Blockchain into Your Supply Chain 

This all sounds interesting, but how do you implement blockchain into your supply chain?

It isn’t a piece of software that you can install onto your computers or servers. Instead, it is an integrative technology that directly plugs into existing supply chains and supplements the existing management software.

An advantage of this is that users can still access and see their existing user interface and business processes. The main difference being is when they check their inventory, businesses don’t just see their own stock but also everyone elses. This allows them to see every modification to stock in real time.

One of the development agencies working on blockchain and other projects in the cryptocurrency industries, Applicature, recommends how companies integrate the blockchain technology into their own supply chain. In order to successfully implement blockchain, they point out that, “companies must understand and evaluate all risks and weaknesses with which they are likely to be faced.  It is essential to review the nature of these risks and work out a map of weak points. Further, the company has to work out a plan of eliminating these points with the help of blockchain technology.” 

They suggest that it’s best to start small and companies should try to apply blockchain solutions to weak points in their systems first. Once they have everything working well and are starting to see some progress, they can then apply blockchain to more of the links in their supply chain and other issues can be worked out of the system until it is running smoothly.

It is the scalability progress that makes blockchain essential in a company’s supply chain. It allows weakness to be rooted out and agreeably resolved. Collaboration between different links and scalability are essential in applying blockchain to supply chain management. 

Although the integration of blockchain in supply chains is still in its infancy, many professional services are jumping on board and investing in the development of the technology. This is improving blockchain’s capabilities and resources, allowing the developers to make it as seamless and streamlined as possible.

The Benefits of Blockchain 

So that’s how to implement blockchain into your current supply chain but what are the major benefits of doing so?

Blockchain allows anyone involved to see the digital or physical products that are in their current supply chain, including the supply chain managers. Pricing and fluctuations in stock are monitored in real time and updated making it an incredibly effective management tool. Because managers at any and every stage of the chain can see this information at the same time, steps in the chain can be streamlined, speeding up purchasing, shipping, and delivery of goods and services.

By doing this, record keeping within the chain is improved, payments can be processed faster, and the people who need to get paid quicker can be. With total transaction transparency and unalterable records, the risk of fraud is greatly reduced and the track-and-trace capabilities improve significantly.

Another benefit of blockchain is that it will allow reconciliation of records between manufacturers, distributors, clients, and customers, allowing for all parties to agree that goods have been bought, shipped, and delivered promptly.

Bill Fearnley, Jr., research director for IDC’s Worldwide Blockchain Strategies, says “The sooner manufacturers and distributors can agree on shipments and receipts, the sooner manufacturers can be paid for their goods. Getting paid faster improves financial liquidity for members of the supply chain.” 

The improvements blockchain can potentially make to logistics could eliminate the need for third parties at unnecessary stages in the chain and reduce risk to company goods and finances. Ultimately, making the management of supply chains less complex.

Challenges of Blockchain

It all sounds pretty good at the moment, but no technology is perfect and blockchain has its own challenges.

Blockchain’s biggest flaw is what makes it unique in the first place, and that is its lack of flexibility over data. Once data is recorded it is there for good; it cannot be deleted or altered later on. Yet, this is also one of the most important aspects of the technology.

Quality of data is a major problem for most logistics companies, and it must be addressed before they can employ blockchain to streamline their services. In addition, the larger the chain is and the more points of contact in it, the more likely the data is to be fragmented or incorrectly inputted. This can be made more difficult if all parties do not unify the measurements or currencies they store their stock in. The primary problem remains that data is often not correctly inputted in the first place. In order for blockchain to be implemented successfully, the input of information needs to be streamlined to ensure all data on file that is permanent is correct.

What are Your Thoughts?

As we move toward a future that is more and more controlled by technology, blockchain seems to be an inevitability. Whether or not it is welcomed by the logistics industry on a wider scale remains to be seen. What are your thoughts on blockchain? Is it a potential way to improve the management of the supply chain? Let us know your thoughts.

How could blockchain technology impact on a supply chain?

Wednesday, November 7th, 2018

It is essential to commit to understanding the latest technologies and how this could impact parcel delivery services.  Whether you want a London courier service, or a courier to Dublin, you need a company that understands global concerns. 

Blockchain and its many applications are certainly going to have an impact on supply chains. Therefore, it is important to evaluate the potential opportunities and threats posed to logistics.

What is blockchain?

There are many people who may not have heard of blockchain. Blockchain is a tech that allows for information to be distributed without the chance of it being modified or replicated.  For this reason, it has become most readily linked with finance, as a block of data can represent monetary value, without worry of someone counterfeiting the funds.

The ideals of blockchain include making the service accessible to all.  A lot of global systems are not open to use in poorer countries.  Therefore, most developed countries have an advantage over others.  Blockchain is a means of democratising information distribution.

Each group of data is referred to as a block.  This block is then added to a chain of other data.  As soon as the block is added it becomes impossible to go back to edit previous blocks in the chain.  Each block is available to view by all, therefore allowing for ultimate transparent and verifiability.

If you imagine it as a vast open document that can be viewed and edited by all, something similar to a Google Document, then you are getting close to understanding blockchain

What is the point of developing new technology?

You can argue that the world already has a complex system of interconnecting technologies: why do we need to add blockchain? There are plenty of answers to this question, not least accessibility.

Unlike traditional tech, blockchain does not rely on the fallible security of usernames and passwords.  Blockchain is built using encryption, using public and private keys to access data.  You can literally store these keys with your pen, known as a paper wallet, making it completely safe from hackers and other online security threats.  This key is a randomly-generated string of numbers that will never be replicated with another user.

Additionally, blockchain is not managed by a single entity.  Millions of computers around the world continually validate the chain.  There is no centralised version of the information, limiting the chance of corruption or hacking.  It would take a lot of computing power to override the wishes of all the users connected to the entire network.

Blockchain and logistics

Supply chains are going to be impacted by the development of blockchain technology.  This has been called the fourth industrial revolution, and all industrial revolutions have had a powerful impact on the supply chain.  First the canals, then the trains, then the computer and now global, democratic interconnectivity.

One of the most exciting developments has been deployed successfully by companies like Tesla.  A digital twin allows a company to produce a dynamic, digital representation of an asset and then track its past, present and future performance throughout the product’s lifecycle.  This would allow a company to quickly reflect on efficiencies and innovations that could be made – anywhere within the supply chain.  It would become like a digital passport that is stamped at each stage of the development and distribution of a product.  In short, blockchain could provide a practical data management service for companies.

Another development for logistics companies could be the opportunity to circumvent international borders to maintain a constant flow of complex information.  The digital twin information can be shared with all stakeholders in the supply chain. 

There are current packages that attempt to give this level of transparency to all links in the supply chain.  However, this is troubled by issues of Big Data or handling large amounts of real-time data.  It also relies on one organisation in the chain taking the lead and therefore reduces the democracy of access to data.

Creating a digital twin allows data to be updated in real-time, moving without friction across international borders, and therefore building trust and cooperation between partners.  Every link in the supply chain can review and reflect on performance data from the lifecycle of the product. 

Such information could allow collaboration across the chain to make more efficient and effective decisions – mainly when looking to improve a delivery service.  There is also talk of the possibilities of blockchain facilitating an automated supply chain – sending out just in time requests literally spot on time.

However, on a simple level, blockchain could simplify the management of agreements and contracts, the tracking of products and the necessary payment for services.  As complexity often breaks most supply chains, blockchain could offer a simple way to seek an overview.

What should UK couriers take away from this?

Blockchain has been troubled by its connection to Bitcoin and the volatility of the financial markets.  However, this is just one, limited application of blockchain technology. The potentials of blockchain continue to be explored by innovators and inventors across the globe – and are of interest to delivery services particularly. 

There is a healthy interest in understanding how this technology can benefit most sectors, and a supply chain could be one that benefits the most. With no central authority, with a chain of command built in, and a level of security that transcends 2FA: it is an exciting opportunity.

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