Determining the total cost of transportation is essential to understanding your company’s profitability. How quickly do customers receive products? How much are they willing to pay to receive those products faster? Were any shipments damaged or otherwise subject to cargo insurance claims? What could we as a company do better?
Understanding the total cost of transportation means understanding the costs and factors affecting spend in each leg of the supply chain. When it comes down to it, accounting for the total cost of transportation is pretty complex. A product changes hands approximately 30 times between the procurement of raw materials and its final destination. That means there are at least 30 different opportunities for something to go wrong, inevitably leading to a higher spend.
To accurately gauge your total cost of transportation, you must first understand line item costs for all transactions. Yes, figuring that out would be as tedious and monotonous as it sounds, but thanks to blockchain technology, the process can be quick and painless.
Blockchain Provides Unmatched Traceability in Freight and Logistics
According to TechCrunch.com, the freight and logistics industry in the U.S. is valued at $1.5 trillion per year. It is arguably the largest industry in the world, but it is plagued with issues and inefficiencies that end up costing more than $30 billion to correct annually.
One of those problems is poor infrastructure. Unclear routes and confusion about road conditions on each route can result in significant expenses for transportation. Another big issue is fraud and theft. These problems typically arise in hidden parts of the supply chain where no one is watching, leading to added expenses or even stolen product.
For both examples, blockchain technology can add an extra layer of visibility in all logistics and transportation processes that will lead to reduced costs. Knowing exactly what is occurring in every part of the supply chain and transportation network is the only way to accurately understand freight spend. Blockchain gives supply chain executives a clear view of all transportation costs, where they are occurring, and why. This information can be leveraged to continuously optimize the supply chain network.
Possible Applications of Blockchain to Manage Total Cost of Transportation
It is important to understand specific applications of blockchain to reduce and control the total cost of transportation. Some examples include:
- Identify and reduce counterfeit product purchasing
- Eliminate financial fraud
- Hold carriers accountable for billing or transport issues
- Identify the cause of delays
- Streamline international trade
- Accurately benchmark past performance versus peers
- Immediately identify products returned to determine potential defects in quality or manufacturing
- Gain insight into the causes of higher transportation spend
- Reduce risk for carriers
- Enhance compliance with trade regulations
Take Control of Understanding Your Transportation Costs with Blockchain
Blockchain is the best technology available to track and trace all aspects of your transportation network, determine your spend, and identify inconsistencies or issues that are increasing costs. Boost your supply chain management strategy by working with us and see for yourself the difference that blockchain makes!