Transforming Logistics- A Blockchain Perspective
The overall process of managing the acquisition, storage, and transportation of goods to their final destination can be termed as Logistics. Logistics also concerns itself with the implementation and planning of processes that involve transportation and storage of service related information from the point of origin to the point of consumption. It also includes operations such as internal, external, inbound and outbound movements.
The current scenario in the Logistics industry contains an array of disadvantages that threatens to overthrow a correctly working supply chain and Logistics framework. A lack of transparency along with a void in the field of tracking of assets and products makes it all the more challenging for any Logistics chain to function as intended. Besides, tracking fraudulent activities within the framework holds utmost importance which would, in turn, generate greater trust from the customers. All these challenges, as experts claim, can easily be tackled by the decentralized distributed ledger technology, Blockchain.
Blockchain technology consists of a data structure representing a record that belongs to any financial ledger entry. All of the transactions that take place comes with digital signatures which are timestamps. These timestamps make each block or data records unique in its own while making sure that no one tampers with the data. The data that is being stored within the Blockchain network has high integrity that ensures its authenticity. The digital records entered within the system is never stored with any centralized system and hence is distributed throughout the network infrastructure. The numerous nodes distributed through the network provides a consensus about the state of the transaction. The moment a new transaction detail is to be added to the existing Blockchain network, the majority of the nodes must execute algorithms to verify the transaction. If the transaction is authenticated with such an ordeal, only then can it be added as a block to the existing Blockchain model.
An inevitable part of any Blockchain network, Smart Contracts would be able to ease the difficulties which hinder the functioning of the Logistics industry. Smart Contracts let organizations and people be tied by pre-defined conditions, which are basically, a set of obligations and rights. Once established within the Smart contracts, these rights and obligations could be executed automatically through a network of computers. Smart Contracts are self-executing and self-verifying as well as being tamper resistant. While turning legal obligations into automated processes, Smart Contracts also guarantee heightened security. It reduces the need for intermediary parties thus significantly lowering transaction costs.
Smart Contracts let Supply Chain and Logistics execute activities on their own by eliminating the need for a presence of trusted intermediaries. On the other hand, a distributed ledger gives access to information which is visible to all parties. With the access to the latest movements in the process, the whole framework moves faster thus promoting cost-effectiveness. The permission-based Blockchain solutions with predefined ecosystem partners infuse higher efficiency while completely eliminating the need for manual paperwork.
The introduction of Blockchain in any Logistics framework would finally make it possible to bridge the gap between supply and demand. With the omission of third parties, loads and packages can now be directly connected to trucks and pick up facilities. Business giants like IBM and Maersk have already ventured into building a Blockchain network robust enough to change the Logistics industry in its entirety.
Big shipping companies, as well as the most famous courier and Logistics service holders, can come together to share a part of their invoice to be connected through a Blockchain Network that would utilize the maximum capacity and caliber of shipping vehicles and trucks. A shared database of every movement of such vehicles would offer utmost transparency which would let not only the Logistics service provider but also the customer to track every move of cargos and parcels. While an ambiance of enhanced security and transparency prevails, it would be much more natural for the customers to put their faith entirely on the Logistics service provider.