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Logistics is not a new industry: the transportation, storage and delivery of goods has been a mainstay of civilization since ancient times. Of course, the forms of logistics have evolved over time and as technology has advanced. Over the past decade, demand for logistics has skyrocketed worldwide thanks to the rise of e-commerce, and the pandemic has further accelerated its adoption. During the months of lockdown, consumers have become accustomed to having essentials delivered to their doorstep within hours of ordering.
However, the most common delivery challenges worldwide can be traced back to the lack of two factors: technology and transparency. Logistics companies are adopting novel technological innovations in their last-mile logistics as more than 56 percent of customers today insist on having complete transparency about their orders.
Supply chain professionals are now thinking of new ways to integrate the best of modern technology into logistics and further optimize the thriving industry. In addition, the complexity in the supply chain is increasing as more and more stakeholders enter the scene directly or indirectly. Technologies like artificial intelligence (AI) are already helping to improve speed and efficiency. Blockchain is now considered a viable solution for more transparency and visibility in logistics. In fact, blockchain can even complement AI, in certain use cases, such as B. the tea/coffee supply chain, paves a new direction for logistics.
Outside of India, there are many other successful use cases of blockchain technology in last mile deliveries. Netherlands-based company Geeba uses blockchain to automate pickup and delivery via drones and droids via smart hubs. FedEx adopted blockchain to resolve customer disputes by sharing detailed information with both the sender and recipient before pickup and after delivery. Visa has also experimented with blockchain technology in its B2B Connect payment service.
Startups in certain Asian countries like South Korea are also experimenting with blockchain technology to make the last mile delivery process seamless and foolproof. They have created centralized delivery platforms and matching messengers for order delivery using AI and intelligent contract-based applications. A number of multinational shippers are also testing the applicability of blockchain to keep paperless transaction records in a distributed ledger, reducing the likelihood of trade fraud and payment disputes.
So far, blockchain adoption in logistics has been limited, with only 5 percent of companies worldwide showing interest in the technology. Brands with high value goods such as military, electronics and pharmaceuticals were the first adopters of it.
A lack of digitization and transparency in the supply chain is an age-old problem. Blockchain may turn out to be a solution to this as it seems to be a natural convergence of trust as it shares commonalities like multiple parties. With increased transparency, blockchain can also help stakeholders uncover fraud at some point in the supply chain process, reducing the likelihood of theft or embezzlement. In addition, payments, transfers, updates of last mile pickups and deliveries, etc. can be performed with the help of smart contracts.
Best Use Cases of Blockchain in Logistics
Globally, blockchain technology has already begun to redefine the scope of the logistics industry. With its long list of real-world applications, blockchain has been adopted by many leading e-commerce and logistics companies for various purposes.
High quality inventory tracking
FMCG giants like Walmart, Unilever and Nestle have partnered with IBM to develop an advanced food tracking system using blockchain. The concept has already been piloted in China and Mexico, where Walmart successfully tracked meat and mangoes to identify spoiled/infected food batches. Blockchain also helps in tracing the origin of medicines, transporting medicines and sourcing these raw materials. When implemented globally, blockchain-based inventory tracking can help improve stocking of high-value items.
Secure billing and payments
Blockchain-based smart contracts can prove useful in facilitating transactions and payments across businesses. For example, fintech company Tallysticks has developed blockchain-based software that can handle invoicing and payments for other companies.
detection of a scam
Considering customer demand, Everledger has used blockchain in the diamond industry to verify the authenticity of the gemstones. They track each diamond to determine its provenance and the information is made available to end customers. In the long term, this policy can reduce counterfeiting and prevent illegal trade.
Improved supply chain visibility
Sustainability marketing brand Provenance has partnered with a coconut importer from Indonesia to prove how blockchain can improve transparency in the supply chain. Using blockchain, they developed a foolproof system that ensured all coconut farmers received fair compensation. This added transparency ultimately helped the coconut brand grow as their customers were impressed with the fair trade practices. Many other B2B logistics companies are also trying to integrate blockchain into their supply chain to achieve similar goals.
Fair freight market
Blockchain-powered cargo platform ShipChain has launched a system that uses transparent blockchain contracts that easily integrate with other systems in use. The goal is to unify tracking across multiple shippers and ultimately use the database to build a decentralized market where businesses can choose a shipping partner based on transparent data about their costs and past performance.
Late deliveries, incorrectly placed orders or damaged shipments can cause many customer disputes and ultimately affect a company’s reliability. FedEx adopted blockchain to resolve customer disputes by sharing detailed information with both the sender and recipient before pickup and after delivery.
Blockades for blockchain on India’s last mile
The main hurdles in actively adopting blockchain in Indian logistics are the lack of knowledge, the amount of energy consumed to operate and the fact that it is seen as a threat by some financial institutions. In total,
Lack of understanding and awareness of blockchain among stakeholders in a supply chain and logistics companies.
- The lack of a standardized blockchain solution can make it difficult for different parties to collaborate and benefit from each other.
- Apart from some very specific use cases in India, there is not much data on the successful implementation of blockchain solutions in logistics.
With the launch of Open Network for Digital Commerce (ONDC) by the Indian government, there is hope that we will see further adoption of blockchain in digital commerce and logistics. In fact, ONDC itself is a blockchain-based protocol that aims to create a fair and transparent marketplace for small and medium-sized businesses across India. As Blowhorn is one of the early participants of ONDC, we too are waiting and watching the best use case for blockchain in our fulfillment services in the near future to help our customers.