Unveiling the Wonders of Blockchain in Logistics

Blockchain, cryptocurrency, big data, machine learning… I’ve heard these fancy words so many times in recent years but never thought about the true potential of the technology that lies behind these fancy names. Until I finally decided to learn. Honestly, after spending several days investigation on the topic I was completely blown out by the impact of blockchain on logistics. Here’s why.

No! Wait a minute. What was blockchain again?

Blockchain is a secure, tamper-proof way (it cannot be modified or altered without detection) for multiple people to store and share data. It is a decentralized database that stores records (called blocks) that are linked and secured with cryptography. Cryptography is a method of storing and transmitting data in a secure and encrypted form. Cryptography is used to protect data from unauthorized access and to ensure its integrity and authenticity.

In simple words, it’s a super-secure space for sharing data. Here you can check a very useful video by Simplilearn with more information about blockchain.

Pros of Blockchain in Supply Chain

In recent years, blockchain technology has emerged as a promising solution to many challenges in the supply chain industry. Blockchain technology has the potential to transform the supply chain in several ways, including:

Transparency

Blockchain technology allows all parties involved in the supply chain to access and track the complete transaction history of a product, creating greater visibility and accountability in the supply chain.

Traceability

Blockchain technology enables the tracking of products at every stage of the supply chain, allowing for quick identification of any problems.

Efficiency

Smart contracts and automation can reduce the time and cost associated with manual processing, increasing the efficiency of supply chain operations.

Security

The decentralized nature of blockchain makes it resistant to cyber-attacks and data breaches, providing a high level of security.

Sustainability

Blockchain can provide detailed information about the production process, helping consumers make informed decisions and encouraging companies to adopt more sustainable practices.

Real-life examples

In fact, many large companies are now implementing blockchain technology into their services.

In 2018, DHL and Accenture developed a blockchain-based prototype to track pharmaceuticals across the supply chain, with the goal of increasing accuracy, streamlining processes, and reducing annual freight spend. The prototype can handle a high volume of unique serial numbers and transactions per second. The project aims to reduce the risk of counterfeit pharmaceuticals in emerging markets, which account for up to 30% of pharmaceutical products. The blockchain technology used provides enhanced safety standards and reduces costs for all stakeholders involved in the supply chain. For more information check this article published on the official DHL web-site.

Walmart, a leader in supply chain management, is now using blockchain to create an automated process for handling invoices and payments of its 70 third-party freight carriers. The implementation of a blockchain network has not only solved payment problems but has also resulted in significant operational efficiencies. Check this Harward Business Review article to find out the key lessons for creating a blockchain network to improve business processes based on Walmart’s case.

Wow! It’s actually a really useful technology. But… the old saying goes, all that glitters is not gold. Blockchain has its cons.

Cons of Blockchain in Supply Chain

First of all, there is a privacy problem. While blockchain technology is secure, the transparency of the ledger means that transactions are visible to all participants, raising concerns about data privacy.

On top of that, the lack of clear regulatory frameworks for blockchain technology can lead to uncertainty and ambiguity, creating legal and regulatory challenges for companies using the technology.

Finally, blockchain technology is complex and requires technical expertise to implement and manage effectively. The current design of most blockchain systems is limited in terms of scalability. The more participants in a network, the more computing power and time it requires to validate and add new transactions to the ledger.

The future of blockchain

As we can see, blockchain technology offers an exciting opportunity for logistics companies to revolutionize their operations and gain a competitive edge in the industry. With fast advancing technologies the cons of blockchain will soon be balanced and it will be an essential part of the businesses in the nearest future.

I strongly believe that despite some challenges and limitations, the potential benefits of blockchain in logistics are truly awe-inspiring and can revolutionize the way we manage our supply chains, making them more transparent, secure, and efficient than ever before. So, let’s embrace the power of blockchain and take logistics to the next level!

The use and impact of Big Data in the Supply Chain industry.

The exponential impact of e-commerce on traditional, brick-and-mortar retailers, is one good example of how the data-driven revolution is sweeping many sectors of the economy and business operations nowadays.

Few organizations have been able to apply the “big analytics” methods that are revolutionizing the ways to define and organize the supply chain operations. Two major challenges might be limiting big data to fully impacting the supply chain. First, there is a lack of capabilities: even supply chain managers with advanced technical skills, fall way behind in the experience with data analysis techniques. This results in a lack of vision to see what big data might be capable of in the industry. The second challenge is that most businesses do not have structured processes for exploring, evaluating, and capturing big data opportunities in their supply chains.

Opportunities in supply chain areas with the use of Big Data.

For a more in-depth analysis about the opportunities in the supply chain industry driven by applying Big Data: https://www.mckinsey.com/business-functions/operations/our-insights/big-data-and-the-supply-chain-the-big-supply-chain-analytics-landscape-part-1

UPS success case

Companies can now optimize deliveries regardless of the obstacles they might find in the road thanks to GPS and location sensors, as well as real-time traffic reports, that allow them to change their path in real time.  UPS could be the most successful big data story in the logistics industry. The company has made significant progress in efficiency improvements and lowering costs through collecting and analysis of data, planning, and forecasting.

More than 200 onboard sensors in 80,000 vehicles measure variables such as speed, location, and idle time. Some of the sensors collect also data on the vehicle’s battery and tire pressure, creating opportunities for proactive maintenance, which is always more efficient than reactive. The goal is to keep a vehicle on the road as much as possible rather than in the shop. Big-data-driven predictive modeling serves as the catalyst for route optimization.

UPS used big data to cut fuel consumption by an estimated 1.5 million gallons in 2012, significantly reducing emissions while increasing operation margins through efficiency. Also, related to cutting costs, they managed to reduce  the wear and tear on vehicles through route optimization. This route optimization models also provide truck drivers with an innovative and unusual solution: they never turn left. When the optimal paths are traced, only right-turn directions are included, reducing the vehicles’ idle time at red lights.

While some firms are starting to invest in greener technology as well as big data initiatives, many supply chain companies are developing new techniques that imitate the outcomes of route optimization by trying to master inventory logistics management and optimizing shipments for efficiency.

Big Data: opportunities to improve Logistics and Transportation performance

One of the pillars of Logistics is data. Collecting data is not the basis of this business but according with the previous posts is very important in order to answer the questions:

1. How much do we store?
2. How many movements per hour do we need?

On the one hand, due to the significance of this topic I would mix the knowledge acquired in class with my own experience. In my everyday activities I’m work with a lot of data: number of datasets, classification, type of content, among others. At this moment is quite interesting mediate about these topics related with Logistics. For example: number of pallets or boxes, classification in conveyors, type of content (liquid, solid, others), among others.

According to the visit of Richard Stallman’s (http://bit.ly/1TCp62n)  at the Polytechnic University of Valencia the past 05/16/2016, let me introduce this TEDx video: Free software, free society at TEDxGeneva 2014. This video shown the implications of free software and proprietary software and suggested interesting reflexions related with the property of this systems. See Video 1 (minutes 1:55-5:38).

Video 1. Free software. <https://youtu.be/Ag1AKIl_2GM> [Accessed: 05/17/2016].

On the other hand; open data, public sector information and big data represents one of the most valuable assets of public and private organizations in order to try give an answer to this open questions introduced before. This information supported by management tools which support information flows through the entire organization like Customer Relationship Management (CRM) or Enterprise Resource Planning (ERP) could dynamize the interexchange relation between customer and supplier. See Video 2 (08:00-10:00): Using Open Door Logistics and Geographic Data to Plan Routes. In addition, I recommend visualize the Video 3: Big Data and Transport (2 minutes).

Video 2. Big Data: datasets. <https://youtu.be/kGoAHczxOsA> [Accessed: 05/17/2016].

Video 3. Big Data: Transport. <https://youtu.be/VXjDhzWfCF4> [Accessed: 05/17/2016].

Datasets related with Logistics:

• GSHHG – A Global Self-consistent, Hierarchical, High-resolution Geography Database: http://1.usa.gov/1XAl3Yo
• The Humanitarian Information Unit (HIU) World Country Polygon Datasets: http://1.usa.gov/1TZsUJ8

Finally, let me introduce the following topic: Is the Big Data the future of Logistics?

The big data could increase the velocity of communication, dynamize the volume of this communication and ensure their viability. Nowadays Big Data represents and strategic asset strategic asset to be considered by sustainable organizations. See Video 4 (2:21).

Video 4. Big Data: Logistics. <https://youtu.be/OCCIX1cnzbQ> [Accessed: 05/17/2016].

Digitalization and Big Data in Logistics

In the last lecture on February 26th, 2016 we defined logistic management as the management of material and information flow and talked about how the importance of the information flow has been underestimated for a long time. In my previous job as student research assistant I learned a lot about Industry 4.0 and digitalization which vastly increases the amount of data collected. This large amount of data is also called big data. The picture below shows how the amount of data will grow within the next years.

source: http://www.emc.com/leadership/digital-universe/2014iview/executive-summary.htm

As it seems to be an important trend that affects logistics I decided to dig deeper into digitalization which enlarges the information flow in a significant matter.

I found a video about the trade fare “transport logistic 2015” for logistics, mobility, IT and supply chain management in Munich (https://www.youtube.com/watch?v=O7zLOriQ5FY). They show different examples on how real-time information can be used in order to increase transparency and efficiency and avoid unplanned costs for different transportation modes (minutes 1:39 until 2:55). At the end the Chairman of the Executive Board BVL concludes that a lot of things will change within the industry due to the ongoing digitalization. Moreover they assume that every third successful business model of today will probably no longer exist in 2020.

The video of BIBA (https://www.youtube.com/watch?v=uVcLbA2R9l8) talks more about the technologies that can be used in order to digitalize logistics. Currently telematics, RFID and various sensor systems are used to digitalize the physical logistic process. As nowadays the position of a vehicle is usually known they are now working on identifying the conditions of goods as well as possible manipulation of the good. Watch minutes 0:54 to 2:02 to see how this works.

All in all I can conclude that even though digitalization can pose a challenge at first it has the potential to improve logistics significantly and make our lives a lot easier.