OEL: Why Blockchain-Powered Logistics is Worth Attempting
Supply chain and logistics — ripe for disruption or basket case?
One of the oldest industries in existence (some say, the industry that literally moves all other industries!), supply chains have not gone by the last two decades without also experiencing some kind of significant transformations. Just as the internet did to virtually every commercial and economic industry, supply chains have undergone quite a bit of change since the 21st century: they’ve become digital, they’ve become more connected to consumers, they’ve globalized, they’ve become more sustainable.
But those in the industry also understand that logistics and supply chains are incredibly resistant to complete disruption — which is why so much technological advancements have failed to address some persistent issues that are perhaps fundamental to why supply chains are still sorely inefficient and cumbersome, with so much fragmentation across centralized players.
The numbers are telling:
- Only 3% of retailers have completed companywide digital transformation projects (Supply Chain Quarterly, 2018).
- In 2013, as high as 40% of US companies did not consider supply chain automation, and an estimated 17% still will not in 2018 (Morai Logistics).
- The average accuracy for inventory was only 63% (GS1 US and Auburn University’s RFID Lab ) — that’s a lot of things that could go wrong!
And with so many now discovering the promise of blockchain technology, even our partner Open Enterprise Logistics (OEL) Foundation acknowledges the inundation of new start ups all purporting to wave the blockchain magic wand to fix every industry problem.
But with each effort comes yet further fragmentation: everyone working in their own silos working on disparate solutions towards what are essentially mutual objectives — and the sheer number of supply chain solutions currently in the works are a testament to just how much a disruption is needed in the logistics industry.
Because it works
Our partner OEL believes that a solution can only be achieves with a united community focused on the task at hand, particularly because of the complexities of logistics and distributed ledger technology.
The OEL Alliance has already demonstrated the power of collaboration with its recent Proof-of-Concept in the Philippines when Alliance member OpenPort sold the first-ever blockchain-powered invoice on Acudeen’s AssetChain.
The invoice was verified it quickly with OpenPort’s blockchain logistics platform, without ever wasting time interacting with the seller’s payer. Effectively, this gave transporters instant and cheap financing, all while allowing real-time tracking and monitoring of transport and custody, to verification of completion via Proof-of-Delivery executing a smart contract to automatically create an invoice.
So what, right? Well, the big deal here was that a blockchain ecosystem proved that it was possible for 3 separate entities (AssetChain, OpenPort and the 3rd party logistics company, XVC Logistics) to work together without ever needing to trust each other. And together, they achieved quicker completion, lower costs, increased efficiency — all with transparent and verifiable traceability, thanks to blockchain.
That, in the world of logistics, is the ideal supply chain.
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