Blockchain Technology can Increase End-To-End Visibility of Inventories
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You've almost certainly heard the concept of blockchain mentioned in recent years, most likely in connection to the finance industry and, more specifically, cryptocurrency. However, the technology which underpins Bitcoin and its ilk has huge implications for the logistics industry, especially when it comes to shipping and transport.
Blockchain technology allows for peer to peer information transfers, with each stage of the transaction creating a block of data which is stored in a public ledger. Each block has a cryptographic key assigned to it which contains encoded information regarding the preceding blocks in the chain. Should anyone attempt to manipulate any link in the chain, it will cause the key to change so significantly it will be immediately apparent.
It's this transparency which gives blockchain technology its much-vaunted security.
One of the biggest problems with supply chains is a lack of visibility. Once a shipment has left its source, there is very little information available, beyond basic tracking facilities, which gives all links in the chain complete transparency into the process. The problem is further compounded by global manufacturing and the fact that shipments can pass through several modes and regulatory environments.
However, with blockchain technology, many of the problems related to visibility and transparency can be addressed. Customers and suppliers can verify the medical device shipments from the destination right back to the source, allowing for an alignment of procedure and increased trust.
The chain of ownership can be effectively traced, adding security to the process.
A big issue with supply chains is the potential for counterfeit goods to find their way in, but blockchain reduces this risk as much as possible. By giving logistics professionals the ability to effectively track chain of ownership, it makes it significantly harder for criminals to infiltrate the supply chain.
"Blockchain technology are secure by design and can enable decentralization and visibility, with application in cryptocurrency transactions, historical records, identity management, traceability, authentication, and many others," writes Alexander A. Kharlamov for Innovation and Supply Chain Management. "However, successful adoption of such technology requires that the people, process and technology are ready. We propose a conceptual framework where the concept and technology can balance between positive and negative manifestations depending on human behavior, therefore determining the success of Blockchain technology application in supply chains."
Container sensors can also be linked into the blockchain, which helps to automate the process of creating new blocks. When a shipment is booked in at a consignment center, or another step in the process, they can be scanned by a device which automatically creates a new entry in the blockchain ledger. This allows any organization with a legitimate interest in the shipment to check the ledger and know the conditions of the container and its contents at any stage in the process.
If a shipment arrives at its destination with damaged products or some other issue, it becomes easier to assess at which point in the supply chain something went wrong. For example, imagine a shipment that needs to be kept within a certain temperature range or its sensitive components risk being damaged. If it arrives with a related problem, it's easy to track the temperature of the container at each step and learn when it fell outside of acceptable parameters.
The immutable ledger also allows the industry to see if there are parts of the supply chain which are failing on a regular basis. This empowers businesses to identify problem links and either address or replace them. This requires the employment of data scientists who are capable of analyzing historical and present data to spot patterns and identify these problem areas.
Blockchain implementation comes with challenges and the technology is still relatively new. However, logistics companies are already getting ahead of the curve and deploying it to create more transparent and visible supply chains. Increasing both variables will give suppliers and vendors the ability to offer and receive superior service and make sure all-important medical devices arrive in the same condition they left the factory.
"While both the concept and technology are relatively ready, human behavior is a challenge as it is known that people suffer from habits and perform poorly when exposed to large volumes of data," writes Kharlamov. "Therefore, the development of advanced supply chains with much greater visibility enabled by Blockchain technology must take people into consideration in order to succeed."
Blockchain technology is set to be a hot topic at LogiMed 2019, in March, at the Rancho Bernardo Inn, San Diego, CA.
Please download the agenda today for more information and insights