How blockchain can transform supplychain and logistics ?

Wolfie Zhao
Sep 5, 2019 at 11:30 AM
Updated Oct 15, 2019 at 03:53 PM

In this digital world, the word Blockchain Technology has become a buzzword which becomes an unavoidable technology in many industry verticals. Supply chain process is the base of every business or industry which connects suppliers, manufacturer, and end-users.

Already we have discussed the use-cases of blockchain in Supply Chain Management in our previous article : How Blockchain Can Renovate Supply Chain Management ( SCM ) ?

Here let us have a deep discussion about supply chain, transportation, and logistics industry, the interconnection of these three industries, the major challenges faced by those 3 sectors and the implementation of blockchain to rescue them from that chaos.

In this article, we are going to cover the following concepts :

1. What is Blockchain Technology?
2. Supply Chain, Transportation, and Logistics - Explained 
3. Interconnections between Supply chain, logistics, and transportation
4. Supply chain and Logistics - Differences
5. Challenges in Supply Chain Management and Logistics
6. Blockchain in Supply chain and Logistics 
7. Future of Blockchain-based SCM

What is Blockchain Technology?

Blockchain is a distributed database used to hold records of digital data or events in a way which makes it tamper-resistant.

The stored information exists in multiple copies that are spread over multiple computers, known as nodes. These nodes are connected to the blockchain network which gets an updated version of the ledger every time when a new transaction takes place.

 

Supply Chain, Transportation, and Logistics - Explained

Supply Chain 

In Business, the term Supply Chain refers to the system which comprises of a group of organizations, activities, information, people, and resources who helps in the moving the product/services from the supplier end to the consumer end.

Supply chain management process involves the transformation of raw materials or natural resources into a complete product or services that are being delivered to the end-users.

Here is an infographics that explains process of supply chain :

 

Transportation 

In business, transportation is the process of movement of products or persons from one place to another. The growth of the ability and the need to transport large quantities of products or resources over a very long distance at high speed paved a way to better transportation medium.

Transportation consists of the fixed installations involving roads, canals railways, airways, waterways, and pipelines.

Logistics 

In the point of business, the logistics refer to the process of managing the flow of things/goods from point of origin to the point of consumption. This process is carried out to meet the requirements of consumers and organizations.

The things managed using logistics involves tangible goods such as supplies, foods, equipment, materials and other usable goods.

Here is an image that lists the processes in logistics :

 

Interconnections of Supply Chain, Logistics and Transportation

As we discussed about supply chain, logistics, and transportation above briefly. Now, let us look at the bonding between those three processes.

In simple words, according to business the term,

Supply Chain - Is the process of transformation of raw materials into final products.
Logistics - Is the process of planning and executing the efficient transportation and storage of goods from the point of manufacturing to consuming.
Transportation - Is the process of transporting goods from one point ( Origin )  to another point ( Consumption ).

When we closely examine, the term logistics and supply chain seems to be the same, but in general, logistics is the process in a supply chain.

Below is an Infographic that explains the whole Supply Chain Management Process:

Source : aka.ms

Both in supply chain and logistics, transportation plays a vital role. Transportation is the medium through which desired products/things reaches the desired persons/place at the right time. Thus, for proper functioning of supply chain and logistics transportation be as a best key driver.

" Supply chain and logistics is the flow of goods or Information -
    and transportation is the driving medium".

 

Supply chain and Logistics - Differences

The key difference between supply chain management and logistics is listed below :

1. Supply chain refers to the important business processes within and across the organizations which drives competitive advantage whereas Logistics refers to the movement, storage, and flow of goods/services within and outside the organization.
2. The term logistics prevails for a long time but the term supply chain management is comparatively new term ti market.
3. Supply chain focuses on competitive advantages while logistics focuses on customer requirements.

Challenges in Supply Chain and Logistics

There are many challenges that the supply chain and logistics industry faces every day. Here are some top most challenges and hurdles in supply chain and logistics management.

1.  Globalization of manufacturing operation
2. Delivering safety and quality products
3. Reaching the right customers at the right time.
4. Presence of shorter lead time and less inventory.
5. Making a strong supplier base and customer networks.
6. Difficulty in accessing the latest technologies for betterment.
7. Lack of transparency in supply chain management and a lot more.

Blockchain in Supply chain and logistics 

Blockchain is a booming technology that provides the transformation of every industry when implemented. This blockchain technology proves to be the rescuer of supply chain and logistics from the above-mentioned challenges.

Blockchain in supply chain and logistics can provide better processing of SCM and helps in reaching the right customers with the right products/services at the right time. There are many supply chain and logistics industry that has been implemented blockchain technology for their betterment.

Recent examples of Blockchain in supply chains

Let us look after some supply chain industry that implemented blockchain technology in their process.

1. BHP Billiton, the world's largest mining organization announced its use of blockchain for better tracking and recording data throughout the mining process.
2. Walmart is using blockchain to keep track of its food and its sources from China and records the origin of each piece of meat, processed, stored and its sell-by-date.
3. Other big corporates such as Dole, Unilever, Nestle also use blockchain for similar purposes.

Benefits of Using Blockchain In Supply Chain and Logistics 

Listed below are some of the benefits of using blockchain technology

1. Perfect tracking of Production & Shiping of goods.
2. Faster tracking of Goods through Customs.
3. Easy Verification of Product Source
4. Reduces Fraud & Counterfeit in delivery.

Here is a video that explains how IBM and Maersk uses blockchain technology for supply chain management :

Future of Blockchain supply chain and logistics

Still, Blockchain is in its initial growing stage and since implementing the blockchain technology in many industry verticals is so difficult. The application of blockchain in supply chain and logistics is also a tedious task, but when applied it works well and shows the best result in the process of supply chain and logistics.

Surely there will be best and transparent supply chain and logistics process in every industry when blockchain is implemented. There are some challenges that one should overcome while implementing blockchain in the supply chain which involves ecosystem difficulty, Currency Volatility and technology adoption and a lot more.

Let us hope for cent percent transparency and faster supply chain and logistics process with the application of blockchain technology.

Get connected with Bitdeal -   A Blockchain Development Company to develop your custom blockchain application for supply chain industry. 

Connect with our blockchain experts to know more about Blockchain Technology !!

Reference :

1. How Blockchain Will Transform The Supply Chain And Logistics Industry

2. Why Blockchain is a Game Changer for Supply Chain Management Transparency

3. Is Logistics the Same as Supply Chain Management?

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