Blockchain technology is making ripples in every type of industry.
As supply chains become increasingly complex—with products being delivered by different modes of transport and spanning multiple geo locations before reaching consumers—industry leaders are turning to blockchain to improve traceability, security, and productivity.
A blockchain is a distributed ledger technology where ‘blocks’ are cryptographically added to a chain of information that is accessible only to the parties involved. It can be used to securely track, verify, and record transactions. As a decentralized recordkeeping mechanism, blockchain has the potential to significantly reduce costs, fraud, and errors in the supply chain.
Trust is essential in any link in the supply chain. However, as technology advances and globalization continues to break down borders, the necessity for greater transparency and traceability in the international supply chain has become more pronounced. In a blockchain ecosystem, transactions can be made securely and instantly—eliminating the need for intermediaries such as banks or governments—but at the same time remaining accessible to the public.
Blockchain affords unprecedented traceability. For example, a developing blockchain application is now poised to enable consumers to trace and verify the origins of halal food with just a QR code scan. With the global halal food industry valued at US$1.4 trillion (S$1.9 trillion) and 1.5 billion Muslim consumers worldwide, this technology can potentially reshape food industry standards.
Blockchain traces products by assigning unique cryptographic identifiers, or smart tags, to the product and records it on the blockchain. As the tagged products go down the chain, tags remain intact and traceable even after processing. Once in the hands of the consumers, the blockchain can verify the origins and reputability of the sources. This allows consumers to make more informed decisions about food and other essential products.
New developments in Internet of Things (IoT) technology had been disrupting the international supply chain for a long time. The IoT is a host of interconnected devices that range from warehouse sensors to driverless vehicles deployed in the supply chain, which improve efficiency and streamline processes. With the advent of blockchain, the IoT has the potential to upend how the international supply chain operates.
Implementing game-changing applications in blockchain technology for IoT fleet management are also underway. With an estimated value of US$3.17 billion (S$4.37 billion), IoT fleet management is one of the fastest-growing market segments in the supply chain sector. IoT Now Transport reported that in Germany, technologies like low-powered, wide-area networks—IoT sensors that track and assess fleets—are being integrated with blockchain technology to ensure consistency. Verizon Connect in the UK reported that real-time vehicle tracking allows operators to monitor metrics like driver performance, vehicle health, and fuel consumption. This is all done using IoT GPS trackers. As blockchain becomes more integrated with IoT technology, international logistics will be disrupted on unprecedented levels.
A report from Tech Republic asserted that using blockchain and the IoT together in the supply chain can reduce counterfeiting and, in turn, provide companies an average net benefit of 2-5% of total revenue. Up to US$200 billion (S$275 billion) is lost each year to pharmaceutical counterfeiting alone. In Bonn, Germany, DHL partnered with Accenture to develop a blockchain application prototype that can trace pharmaceuticals along the entire supply chain to combat counterfeits. The hope is that this will save lives by reducing the amount of fake medicine on the market.
Despite all the progress made, we are still only at the beginning of blockchain’s potential in the supply chain. In the future, expect to see the technology more widely used in every link of the supply chain and logistics industry.
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Scarlet Bane has been fascinated with technology all her life. Since graduating she has been committed to writing about the latest tech trends and how they are shaping the world. In her free time she is an avid game enthusiast
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