Innovation in logistics and supply chain management blockchains

Innovation in logistics and
supply chain management:
Blockchains
By: Ainsley Brown

Blockchains and logistics
Blockchains for supply chains – part II http://resolvesp.com/blockchains-supply-chains-part-ii/

Blockchains
• What is it?
• What is its connection to logistics and supply chain management?
• Why is it so revolutionary?

Blockchain: What is it?
• In the simplest of terms, blockchain is just a new form of decentralized
database.
Forbes: 14 Things Everyone Should Know About Blockchains
https://www.forbes.com/sites/bernardmarr/2017/09/21/14-things-everyone-
should-know-about-blockchains/#6e5dbf8b252a

What is it?
• It's a shared ledger for recording the history of transactions - that cannot be
altered.
IBM: Blockchain 101 Infographic
https://www-01.ibm.com/common/ssi/cgi-
bin/ssialias?htmlfid=XI912346USEN&

What is it?
• Blockchains are ledgers (like Excel spreadsheets), but they accept inputs from lots
of different parties. The ledger can only be changed when there is a consensus
among the group. That makes them more secure, and it means there's no need for a
central authority to approve transactions.
Business Insider: There is a 'game changer' technology on Wall Street and people keep
confusing it with bitcoin
• http://www.businessinsider.com/what-is-blockchain-2016-3/#blockchains-are-ledgers-like-excel-
spreadsheets-but-they-accept-inputs-from-lots-of-different-parties-the-ledger-can-only-be-changed-
when-there-is-a-consensus-among-the-group-that-makes-them-more-secure-and-it-means-theres-no-
need-for-a-central-authority-to-approve-transactions-1

Internet of value
• You can think of blockchain as the “internet of value.” It’s a real-time ledger of
anything that can be recorded (financial transactions, contracts, physical assets,
supply chain info, etc.) but there is no one person or organization in charge of the
entire chain. In fact, it’s open and everyone in the chain can see the detail of each
record—what’s known as a block.
https://www.forbes.com/sites/bernardmarr/2017/09/21/14-things-everyone-should-
know-about-blockchains/#6e5dbf8b252a

Time stamped and encrypted
• Each block is time stamped and encrypted; the only person who can edit a
block is the one that “owns” it. Owners gain access to their block through a
private key that only they have. When there are changes to an individual
block, everyone’s distributed blockchain is updated and syncs in real time.

Incorruptible digital ledger
“The blockchain is an incorruptible digital ledger of economic transactions that can be
programmed to record not just financial transactions but virtually everything of value.”
Don & Alex Tapscott, authors Blockchain Revolution (2016)
What is Blockchain Technology? A Step-by-Step Guide For Beginners
https://blockgeeks.com/guides/what-is-blockchain-technology/

Don’t get bogged down in technological
complexity
• People often get bogged down in technological complexity when trying to
understand blockchain, but the basic concept is a simple and universal one. We have
facts and information we don't want accessed, copied, or tampered with, but on the
internet, there's always a chance it could be hacked or modified. Blockchain gives us
a constant—a bedrock we know won't change once we put something on it and
where a transaction will be verified only if it follows the rules
Blockchain: The Invisible Technology That's Changing the World
https://www.pcmag.com/article/351486/blockchain-the-invisible-technology-thats-
changing-the-wor

Picture a spreadsheet
• Picture a spreadsheet that is duplicated thousands of times across a network
of computers. Then imagine that this network is designed to regularly update
this spreadsheet and you have a basic understanding of the blockchain.

Shared and continually reconciled database.
• Information held on a blockchain exists as a shared — and continually reconciled
— database. This is a way of using the network that has obvious benefits. The
blockchain database isn’t stored in any single location, meaning the records it keeps
are truly public and easily verifiable. No centralized version of this information
exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its
data is accessible to anyone on the internet.

How blockchain transactions work
Business Insider: There is a 'game changer' technology on Wall Street and people keep confusing it with bitcoin
http://www.businessinsider.com/what-is-blockchain-2016-3/#blockchains-are-ledgers-like-excel-spreadsheets-but-they-accept-inputs-from-lots-of-different-parties-the-ledger-can-
only-be-changed-when-there-is-a-consensus-among-the-group-that-makes-them-more-secure-and-it-means-theres-no-need-for-a-central-authority-to-approve-transactions-1

Security
• While nothing is fully hackproof, blockchain is significantly more secure than
anything else we have today.

Security
• GREATER SECURITY. The technology will enable supply chain companies
to identify attempted fraud more easily.
What Is Blockchain And How Is It Going To Benefit The Logistics Industry
https://www.eft.com/logistics/what-blockchain-and-how-it-going-benefit-logistics-industry

Blockchains: What is its connection to
logistics and supply chain management?
• With blockchain technology, customers will be able to see every part of the
journey their product took before arriving in their hands. The network
behind the store shelf will no longer be hidden, allowing the customer to
make better informed decision

Compliance and Transparency
• Transparency is the most influential and important benefit of blockchains.
Blockchains will help to prevent organizational silos within existing parts of
the supply chain and help supply chain leadership, such as C-level executives
understand how to make the supply chain more efficient and productive.

Better Tracking of Orders and Assets
• Since blockchains can be effectively tracked through all processes, companies using
blockchain technology will be able to more readily produce detailed information
about a product’s lifecycle, including supplier information, manufacturing details
and logistics information.

Reduction in Errors in Payment Processing and
Auditing
• Regardless of personal opinion, banks do make mistakes. Occasionally, auditing may
not identify all of the potential overbillings or overpayments as well. But, blockchain
technology can make reducing these errors easier by creating a finite paper-trail to
isolate where the problem occurred. Therefore, the company can verify all operating
systems that were effected and make changes to prevent the problem from
occurring again

Identification of Attempted Fraud More Easily
• Even the most scrutinizing audits can overlook indicators of fraud in mountains of data.
However, blockchain technology is already enabling today’s supply chain entities to identify
attempted fraud more easily. For example, an employee that goes into the system to change
past events will alter the coding of the event. However, the altered coding appears so
differently that it would be practically impossible to not notice the change This will allow
companies to recognize the fraud and who initiated the change almost immediately, further
driving down costs from poor employee practices or even potential fraud attempts by
customers.

Greater Trust by Consumers
• Customers trust what they can “see.” If a customer knows where a product
originated, they are more likely to develop a trusting relationship with a given
supply chain entity. However, this trust extends beyond supplier information.
It can show if a company provides realistic delivery expectations for its truck
drivers and more.

Real-Time Feedback From Consumers
• The benefits of blockchain technology also include how customers respond to
products. For example, a customer may seek to place future orders on produce
when it drops below a specified rate after purchasing food items that were prepared
with produce from a given farm,. In addition, this feedback will be connected to the
information of the supplier and manufacturer, which will help the supply chain
create more accurate forecasts in real time.

Better Scalability
• This benefit is actually a compounding benefit of real-time feedback, but it is extremely
important to denote how blockchain technology enables scalability for parts of the supply
chain. In other words, blockchain technology can be used to identify potential trends
and help an organization prepare to grow a business to respond to possible surges in
the market. Furthermore, the use of blockchain technology is independent of politics,
making it necessary for supply chain entities entering new markets.

Blockchain: the revolution
• There are several benefits of blockchain technology that promise to revolutionize business
and finance. Blockchain technology establishes a peer-to-peer network within one
system, so it cuts out the time and costs of intermediaries (the “middle man”) and
the complexity of using disparate ledgers and processes throughout the lifecycle of
any transaction. There would be no need to have another entity process the transaction or
be required to wait for them to do so. Every transaction goes into a block, and each block
connects to the one before and after it which amps up its security.
https://www.forbes.com/sites/bernardmarr/2017/09/21/14-things-everyone-should-know-about-
blockchains/#6e5dbf8b252a

The revolution is here
As futuristic as some of these applications sound they being applied by
companies like:
• IBM
• Walmart
• Maersk
• BHP Billiton

Port management: The Port of Rotterdam
• The Port of Rotterdam, Europe’s largest shipping port, is taking part in a
Blockchain consortium which is focusing on logistics. The project has the support
of more than fifteen public and private sector companies based in the Netherlands.
Consortium members will spend the next two years designing and developing
applications for blockchain technology in the logistics sector. There have been
similar efforts in the past, but according to the founders, this blockchain project is
unique because of its scale in the logistics chain.
Logistics on the Blockchain? It’s happening.
https://blog.sweetbridge.com/logistics-on-the-blockchain-consider-this-319859d87089

Port management: Port of Antwerp
• Belgium-based Port of Antwerp, the second largest port in Europe by container
capacity, is running a pilot blockchain project focused on logistics automation. They
announced they are looking to use the technology to automate and streamline
the terminal’s container logistics operations. The test is being conducted in
conjunction with a blockchain startup called T-Mining. The goal is to speed up the
interactions between port customers to prevent the malicious manipulation of data.
https://blog.sweetbridge.com/logistics-on-the-blockchain-consider-this-319859d87089

Walmart
• U.S. retail giant Walmart has started a major test of blockchain technology for
supply chain management. A pilot project, scheduled to start in the first quarter of
2017 and run for four months, plans to leverage distributed ledger technology to
track and trace pork in China and produce in the U.S.—two high-volume product
categories with large markets. The project—a collaboration between Walmart, IBM
and Tsinghua University in Beijing—was first unveiled in October, when the project
partners claimed they were creating a new model for food traceability, supply chain
transparency and auditability. “By harnessing the power of blockchain
technology designed to generate transparency and efficiency in supply chain
record keeping, this work aims to help enhance the safety of food on the
tables of Chinese consumers,” noted an IBM press release.
• https://blog.sweetbridge.com/logistics-on-the-blockchain-consider-this-319859d87089

Food and drug: traceability
• It is also thought this technology could be effective in enhancing food and drug
traceability. Provenance, a U.K. software startup, looks to use blockchain
technology to establish the authenticity of food. Provenance is testing the
technology to authenticate tuna caught in Indonesia delivered to Japanese
restaurants. Provenance takes information from sensors or RFID tags and records it
on the blockchain to track the fish from “hook to fork.”
Forbes: Blockchain In The Supply Chain: Too Much Hype
https://www.forbes.com/sites/stevebanker/2017/09/01/blockchain-in-the-supply-
chain-too-much-hype/#674c9cdf198c

Blockchain and the Internet of Things
• There are many different benefits of blockchain technology, and its implications
range from simple asset tracking and transparency to real-time feedback from
customers. Yet, the true scope of the benefits of blockchain technology is
unlimited, and it could be one of the most remarkable breakthroughs in the
supply chain in history. With a world that is becoming more connected on a daily
basis, blockchain technology will inherently develop into a symbiotic
relationship with the Internet of Things and today’s advanced logistics and
supply chain management systems.

Blockchain and logistics :summary
Blockchains for supply chains – part II http://resolvesp.com/blockchains-supply-chains-part-ii/

Innovation in logistics and supply chain management blockchains

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