Top Reasons To Blockchain Your Supply Chain
Yes, “blockchain” is a verb now, and it means to transition your business operations from using traditional procedures to using blockchain technology. Though its origins lie with Bitcoin, blockchain has innumerable possible applications, including other cryptocurrencies, smart contracts, and tokenizing assets. There is another area that Fr8 Network is at the forefront of revolutionizing: the supply chain.
Many inter-business supply chains struggle to keep up with demand, resources, and labor power. The broader chain is just as inconsistent and sometimes outright broken. This is an economically dangerous system for businesses that operate with trust between one another as a foundation — but what if this didn’t have to be the status quo forever? Transparent public ledgers dramatically improve trust between parties (how could they not, when every transaction is proudly and permanently displayed?), so blockchain technology is what we need to optimize the supply chain. Here are reasons why you need to get started with “blockchain-ing.”
As a recent DHL-Accenture report notes,
“Already many projects are underway to apply blockchain technology to global logistics, adding value by boosting supply chain transparency and automating administrative operations. Imagine how the physical flow of goods can be more effectively orchestrated and synced with information and financial flows when blockchain is combined with the Internet of Things, artificial intelligence, robotics, and more.”
It can connect the pieces
If any part of your business connects with the supply chain, you know how difficult logistics can be. There are so many brokers and tracking companies out there that they end up hoarding data from one another, leaving the people in the middle to flounder. When supply chains are complex, there is lots of room for oversight and mismanagement. With blockchain, however, everything is laid out for everyone to see, clear as day, meaning that everyone involved in the process can be held accountable or risk both embarrassment and business.
Intermediaries are also one of the biggest necessary evils of the supply chain. Without them, nothing connects — but they also often silo information and plan impractical connections due to high margins. With blockchain’s transparency, intermediaries are far less necessary if not completely eliminated. This could significantly reduce operational costs and allow parties to connect between one another without the help of a third party holding an agenda.
It can prevent mishaps
Harvard Business Review reminds us of the difficulty Denver-based Mexican restaurant Chipotle faced in 2015: it had an outbreak of E Coli that left 55 customers sick, which resulted in plummeting stocks, decreasing sales, investigations, and a broken reputation. What happened to Chipotle and its customers could have happened to a number of any food businesses that depend on multiple suppliers to deliver different ingredients.
Due to Chipotle’s complicated system, it was unable to properly monitor its suppliers in real time (which is crucial when dealing with a product like food). The contamination went by unnoticed until it was too late, and containing it was almost impossible. If Chipotle had been using blockchain technology, the company could have used it to track activity logs, vehicle locations, and record permissions to ensure that contaminated goods never made it to any of its restaurants.
It can help automate processes
Making a deal means you have to put in the effort necessary to follow through with whatever terms you and the other party agreed upon. This is only fair — but imagine if, even if you don’t change the amount of terms or their difficulty, the effort could be automated. This means less planning, less bureaucracy, and less room for human error.
The DHL-Accenture report also mentions that approximately ten percent of freight invoices contain faulty data. Paper trails not only kill trees, but who can actually make sense of pages and pages worth of logs and asset representations? This is where smart contracts come in: rather than manually following through on deal terms, parties could ensure that their required actions happen automatically. Forbes specifies that “this automation can be extended to services that currently require an intermediary such as insurance, legal, brokerage, settlement services, outsourced transportation management, normative compliance, route planning, deliver scheduling, fleet management, freight forwarding, and connectivity issues with business partner,” along with payments and ownership transfers.
It works for anyone
Even small businesses can use blockchain to manage their shipments, deliveries, and inventories. For example, Logistics Bureau says
“Smart contracts are being used for redistributing excess power from solar panels. The Transactive Grid is an application running on blockchain to monitor and redistribute energy in a neighborhood microgrid. The program automates the buying and selling of green energy to save costs and pollution.”
Blockchain isn’t just for the big players, but Fr8 Network intends to be one. By placing the supply industry on the blockchain, we are prepared to maximize the supply industry’s efficiency, ensuring that people who make and need products are never neglected, and no one is left with faulty (or even detrimental) goods.
