Increasing globalization and complex supply chain systems are leaving a major impact on many international logistics companies. Merchants are losing a large amount of their income due to cyber threats, theft, inefficient operations and needless middleman fees. To deal with these issues, blockchain offers a final solution to companies that seek to conduct leaner, more efficient and more organised operations.
So, what exactly is blockchain technology in logistics?
Blockchain is a decentralized database system that maintains digital records with transparency and security while operating without the need for a central authority.
What are the benefits of introducing blockchain in the logistics industry?
Incorporating blockchain in logistics industry can solve key challenges by developing encrypted digital data that efficiently tracks products at every phase in the supply chain. The best part is that it can automate a lot of manual processes by verifying goods and reducing paperwork and also providing a shipment’s traceability.
Here are some of its key benefits:
1. Enhances transparency and traceability in the supply chain
By combining data from all supply chain players, blockchain creates a centralized repository. It also serves as a proof-of-origin in addition to ensuring that the supply chain‘s safety regulations are met. You can also track the performance of carriers and get real-time updates on the status of different means of transportation.
2. Ensure authenticity and security
Since global trade transactions are primarily based on paperwork, the risk is substantial because you don’t know if the other party will provide you with the goods or if the importer will pay you. Furthermore, in the event of global trade, where document verification and assessing a product’s quality is essential, there is a threat that these documents will be fabricated. Here, blockchain technology creates a trustworthy environment by ensuring that the transaction data on blocks is resistant to falsification or manipulation.
3. Improves operational efficacies
By checking each transaction, blockchain helps to avoid duplicate transactions and errors. It’s also quicker than the manual method.
4. Minimizes complexities in the logistics process
Blockchain removes the role of intermediaries by instilling confidence trust between partners and enabling peer-to-peer models. Every participant in the transaction has the ability to review and validate the data. In addition, smart contracts can also be used to automate procedures like ownership transfers, payments and cargo checks.
Smart contracts are basically computer-coded follow-up tasks that occur automatically. They can carry out the contract’s next-day activity, such as making an automatic payment once the arrival of items has been verified.
Blockchain is projected to cause a paradigm shift in logistics in the future. It will speed up transaction verification and facilitate the delivery of goods and services by fostering mutual confidence among participants.