For anyone who has read anything about technology in the past two years, the words reliability and resilience sound synonymous with the concept of blockchain.
To show how this combination makes sense, here are some arguments for why blockchain and modern logistics technologies have the potential to revolutionize supply chains as we know them.
1. Trust is a bottleneck
One of the biggest challenges in modern logistics is checks and balances. As we all know, the old supply chain relied mainly on trust, and trust was the biggest bottleneck in the industry.
They had to trust their drivers to behave appropriately on the road, but one of the biggest thorns in the industry was that drivers often profited off of fuel. All they had to do was misreport the amount of fuel they needed and then embezzle and sell the rest. It was very lucrative for the drivers, but as a company, they stood to incur a lot of avoidable losses.
But this is no longer the case. Firstly, modern fleet management systems offer much more than just monitoring: they literally analyze driving behavior and the vehicle’s fuel economy in real time. In other words, false reporting doesn’t happen because reporting is no longer the driver’s responsibility.
Generally, in these new systems, reporting is fully automated, and the use of a proper vehicle work order template makes everything more systematic and reliable. In addition, the system now works on the blockchain, so the files cannot be tampered with.
In a sense, blockchain technology helps to create a trustless environment in the logistics industry. This does not mean that trust will disappear, but rather that we will create an environment where trust is not needed (where we can get by without trust).
Now this entire process is automated, everything is transparent and most importantly, all reports can be fully trusted – everything is as reported.
Not only is this a great safety measure, but it also plays on everyone’s psychology: people are much more honest when they know they will be caught if they try something.
2. Switching to electric vehicles
Another major change is the introduction of electric vehicles, which will bring about a much bigger revolution in logistics technology than initially anticipated.
Firstly, electric vehicles have reached their apex and one of the most rapidly evolving aspects right now is software, a prime example of which is Fortescue’s Elysia battery intelligence, which represents a quantum leap in battery software.
These apps will help to estimate the performance and energy consumption of electric vehicles much more accurately, significantly improving vehicle maintenance and efficiency.
With increased precision and insight, we can finally address what is arguably the biggest problem with EVs: range anxiety. Knowing exactly how far a vehicle can travel on a full battery charge makes it easier to trust your fleet.
One of the challenges and innovations worth addressing with electric vehicle fleets is the use of scheduling software. That said, charging is always an issue, as refueling takes minutes but charging takes hours. Therefore, creating a proper charging schedule may be one of the most important tasks for a modern fleet manager.
Ultimately, a better understanding of the state and condition of your battery makes it easier to program optimal charging, which in turn extends the battery’s lifespan and performance, resulting in much better results.
Remember, scheduling and maintenance all add up to more efficient supply chain and logistics – and with the right software and software integrations, this becomes much easier.
3. Supply Chain Finance
Supply chains only exist within the broader context of business, meaning that every delivery is closely intertwined with specific financial processes. Blockchain technology can significantly reduce the risk of fraud, which is especially important for stakeholders who demand the greatest possible transparency. As such, the blockchain ecosystem has the potential to completely revolutionize finance as we know it.
Secondly, it is important to address the risks of sharing real-time transactions among all parties involved. With blockchain, there is no need to go through a lengthy process of data validation as all information is available in real-time.
By reducing the need for paperwork and red tape, a blockchain-based supply chain is simpler in structure and significantly reduces operational costs. Many of these processes are automated (as we will see in the next section), which also speeds them up. Aside from cost savings, speed is key in the supply chain industry.
All these benefits are very impressive, but the difference is most noticeable in cross-border trading scenarios. International trade is the foundation of the modern global economy, but it is slow and chaotic due to bureaucracy. With the help of blockchain-powered supply chains, this process can be significantly sped up.
Decentralizing a supply chain system seems like something that would confuse and even slow it down, but with the help of blockchain technology, this doesn’t have to be the case anymore. If the model is well structured and the algorithms are right, automating the process should be fairly easy.
4. Smart Contracts
Although smart contracts have been around since before blockchain technology, this technology trend has actually taken them to a whole new level.
The very concept of a smart contract means you set conditions in advance and the contract will be executed once the conditions are met. The problem is that many supply chain managers feared the potential misuse of these conditions. Because the contracts are executed automatically, the process is irreversible and you may not realise something is wrong until it is too late.
Luckily, thanks to blockchain technology, these fears have finally been put to rest: we now have incredible autonomous tools we can trust.
You see, the big problem with blockchain isn’t just its robust technical properties, it’s also the fact that it won the perception battle: people trust it. There are other tools that are almost as trustworthy, but they aren’t perceived as impenetrable, and this wariness is slowing down the adoption rate.
Another element worth mentioning when discussing supply chains is the ability to track the whereabouts of cargo in real time. With blockchain, this is possible and completely trustworthy. This kind of transparency is unprecedented, but it is no longer considered an add-on feature, but has become an industry requirement.
Finally, because blockchain is a tool and an algorithm, it is highly scalable. It doesn’t matter how many processes you have to manage, if you configure it properly, you won’t have any problems.
5. Data sharing and collaboration
In one of our opening segments, we talked about the risk of drivers stealing or diverting fuel, but drivers are not the only ones in a position to cause problems or engage in corporate theft: unscrupulous fleet managers or even company owners looking to rip off stakeholders can be just as nefarious.
With the help of blockchain technology, a distributed ledger is possible, allowing all parties involved to have a full understanding of what is happening at any given moment. There is complete transparency and no one in power, since there is no central authority. In other words, everything is transparent, and even if it wasn’t, there is no one in charge of the mechanisms that could rig the system.
It’s not just transparency that matters. It’s traceability that makes the difference: data cannot be tampered with after the fact, and everything that happens on the ledger leaves a permanent digital footprint. In other words, diagnostics are highly conclusive and reliable.
What improves collaboration capabilities the most is the fact that blockchain works on standardized data formats and protocols, which means it can be easily used across organizations and teams. It is also very easy to integrate with other tools, allowing for integration with existing systems.
As mentioned before, the concept of scalability is part of the very essence of blockchain. Nevertheless, one of its greatest advantages is that the system performs consistently regardless of the number of requests.
6. Blockchain will increase transparency and consistency in supply chains
Ultimately, blockchain can increase transparency in the supply chain and completely eliminate situations where trust is essential to operate in this sector. Best of all is the fact that blockchain technology improves every part of the chain. Through a series of subtle (and not-so-subtle) improvements, the entire supply chain sector will grow.
About the author: Srdjan Gombar
A seasoned content writer, published author and amateur boxer. Srdjan holds a BA in English Language and Literature and is passionate about technology, pop culture and personal development. In his spare time, he enjoys reading, watching movies and playing Super Mario Brothers with his son.
