The use of blockchain and supply chain management (SCM) platforms can reshape how shippers approach everyone from consumers to carriers. A platform that combines blockchain and SCM has the potential to eliminate many of the laborious manual processes involved in tracking shipments and preparing them for transit. Instead of trying to answer the question, “Does our supply chain need blockchain,” ask yourself, “What benefits can we reap from integrating blockchain into our supply chain?”
The Lack of Visibility Is Holding Us (and Our Shipments) Back
As per Deborah Abrams Kaplan of Supply Chain Dive, the typical shipment moves between 30 different organizations. That means 30 different systems, a huge trail of paperwork, hundreds of hands on the product, and more than 200 communications regarding the shipment. Applying this to a company moving 20,000 shipments per year would amount to 4,000,000 communications amongst thousands of different systems and organizations. Talk about ample opportunity for a miscommunication. It’s clear that for larger companies, the sheer volume of activity makes traceability and visibility nearly impossible.
Additionally, companies with limited financial and technical resources may not have advanced risk analytics programs in place. Others may forgo risk management in favor of profitability. This creates a greater potential for fraudulent activity.
Lastly, given incompatibilities between the software of individual companies, it is not uncommon for shipments to be delayed. You may not even know why a delay has occurred due to the lack of transparency within the supply chain.
Indicators of Poor Visibility to Look Out For
Blockchain has the potential to change the game as we know it by increasing transparency and thereby, traceability. For error-prone shipments, like those in international trade, blockchain could be leveraged to reduce fraud and cut transit time by up to 20%. According to Techspective.net, paperwork in international trade accounts for a fifth of ocean freight costs. Blockchain could streamline the management of paperwork and documentation which would lower freight spend for ocean carriers by up to 20%. And let’s face it, extra money is always a good thing.
It is important to be able to identify poor visibility within today’s supply chain. Here are some characteristics to look out for:
- Freight spend that exceeds benchmark rates.
- Repeat instances of spot surcharges.
- Inability to identify a shipment’s current location.
- Unusually high employee turnover rates.
- Recurring delays crossing international borders.
- Existence of data silos in disparate systems.
- Miscommunications between your company and any other party.
Benefits of a Combined Blockchain SCM Approach
Companies that take advantage of a combined blockchain and SCM platform will enjoy increased transparency and traceability. A combined system will also leverage open-source software to ensure compatibility. This means more users can record shipment data. Although commonly used to describe public blockchain, even private blockchain platforms may leverage open-source software to ensure compatibility with existing systems. Shippers that lack the wherewithal to create blockchain platforms can turn to third-party platforms like our Track and Trace platform to take advantage of blockchain without the steep investment costs. Additionally, working with third-parties helps guarantee compatibility which is critical for bringing blockchain to other industries like retail and food service.
According to CoBank, the agricultural industry will be among the first to benefit from the introduction of blockchain. It will lower transportation costs, optimize logistics, and enhance food safety protocols. For example, companies that suffer significant losses due to an outbreak of foodborne illness (think E. coli and romaine lettuce) will be able to immediately identify the suppliers that contributed to the outbreak. This will mean the ability to stop the spread of the pathogens along with less food wasted.
Boost Transparency by Partnering with a Blockchain Expert
Blockchain is moving towards real-world supply chain applications at lightning speed. Shippers today have a unique opportunity to take advantage of a combined blockchain and SCM platform to restore end-to-end visibility. Since developing an in-house solution is expensive and often leads back to compatibility problems, you should take advantage of a public blockchain. So, does your supply chain need blockchain? Get in touch with us to find out!