Lets us see Let us see how blockchain can be implemented in the logistics industry and how it affects the logistics industry:
A blockchain is a distributed database that is shared among different computers or nodes in a computer network. A blockchain stores information electronically in digital format. They are generally used in cryptocurrency systems for maintaining a decentralized and thus secure record of transactions.
A basic point of difference between traditional databases and blockchain:
A blockchain collects information together in groups called blocks, which hold a set of information. A block has a certain capacity for storage. Once filled, new information is added to a new block linked to the previous block. All these blocks are connected like a chain, thus forming a network of blocks.
The complete process of managing how resources are acquired, stored, and transported to their final destination is called Logistics.
Logistics management involves processes like identifying distributors, determining their accessibility, effectiveness, and financial feasibility. Companies in the manufacturing sectors are largely dependent on logistics management as their products have complex supply chains and thus efficient logistics management helps them increase profitability and survive in the highly competitive industry.
For companies, the goal of logistics management is to have the right amount of inventory at the right time and location in the best condition possible which helps them deliver the improved product or final product to the internal or external customers respectively. With disruptive technology trends and increasing complexity in the supply chains of companies, logistics processes are now not just dealt by humans but are integrated largely with software and sometimes by outsourcing it to third-party logistics firms that monitor the movement of inventory or resources along the supply chain.
Let us dig deeper into how can blockchain be implemented in the logistics industry and the challenges this technology can face in logistics.
The major problem that is unaddressed in the logistics industry is the lack of transparency between manufacturers and buyers. A lot of miscommunication happens between vendors, suppliers, and distributors as well. This eventually leads to difficulty in tracing each delivery stage. This is where blockchain technology steps in.
As supply chains of companies are now not just regional but global, blockchain technology can help improve the shipping and freight in logistics. It can be implemented for regional as well as international shipping processes. Blockchain forces manufacturers and transport agencies to enhance their production capacity and production processes for efficient capacity utilization in the supply chain. When all the processes are implemented correctly, it provides a clear flow of inventory or products both upstream and downstream. In addition, it increases the supply chain and logistics transparency making it easier for the business to communicate with all interested parties.
-Blockchain technology helps in finding out problems in inventory tracking. It offers firms the ability to manage inventory at the macro and micro levels with real-time data and analytics reports. Disputes can be solved faster with immutable data and cargo information. This helps companies to deliver goods or end products to the consumer at the right time and in the right location as well.
In traditional supply chains. The carrier and the consignee interpret the time of delivery differently. This has a negative impact on the business and business relationships as well. In such cases, blockchain is used for transportation while giving all the parties in the supply chain access to the same version of documents digitally, reducing any misinterpretation. The entire exchange of data is stored in blocks and so it is impossible to make changes to this information. In case of any disagreement or dispute, it is easier to find the root of the problem and resolve disputes.
That is how blockchain can be implemented in the logistics industry