Four Ways Blockchain will Change the Supply Chain
Supply chain management is complex, with some products moving through multiple geographical locations and involving several transportation partners. Traceability and transparency are key functions of the supply chain, and the ability to track goods from the initial step to the final delivery can give both shippers and consumers added assurance about the integrity of goods. Blockchain technology could take that a step further, verifying each link within the chain.
Today the most prominent use of blockchain is in cryptocurrency, but because blockchain serves as a distributed, digital ledger, it can have many applications.
Tracking and Tracing Goods
Within the supply chain, blockchain breaks each movement within the supply chain down into a block, updating, validating and recording details around each movement in real time. Within each block, blockchain would identify the parties involved, price, date, location, quality, state of the product and any other information relevant to managing shipments.
The availability of the ledger makes it possible to trace every product back to to the origin of the raw material used. Important data can be updated in real time, which could eliminate the need for reconciliation with each other’s internal records. The ledger would also create more detailed visibility of movements and the product’s status, which would be accessible by each party within the supply chain network.
To build brand loyalty, companies must generate consumer trust. The ability to validate a product’s source and track it throughout the supply chain has multiple benefits, such as eliminating concern over counterfeit products, increasing visibility, and quickly locating products in the event of a recall.
Linking the blocks together creates a record of the parties involved in the process and provides specific details associated with each movement, which all parties can access. Because every transaction within blockchain is recorded on a block and across multiple copies of the ledger that are centrally distributed, it is transparent.
Blockchain technology improves security because each transaction is validated and recorded by an independent third party and then stored in a decentralized location. No single party can modify or delete the details within a block without a validation from others in the network. Because the digital history is not owned or controlled by any one supply chain partner, it’s available for all verified partners to use.
Penske Logistics sees potential benefits in blockchain technology for its customers. These include improving order accuracy, tracking physical assets, and securing freight bill pay and audit transactions across Penske’s extensive freight brokerage and dedicated carriage operations.
Penske Logistics entered the Blockchain in Transport Alliance (BiTA) to gain a better understanding of the benefits of blockchain for its customers and to be a part of crafting the standard framework in the development and implementation of blockchain technology.
BiTA provides a forum to promote and educate within the transportation industry while encouraging the development of blockchain applications.