Blockchain’s ability to hold a single shared truth of the transactions that take place is being used in a variety of applications. One of those is in logistics, where this is sorely needed.
Logistics is an industry that has long suffered from the presence of a high number of intermediaries and non-transparency. Certain characteristics of how the blockchain functions will allow it to be a perfect fit to the problems of the logistics industry; signifying the beginning of a new trend.
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Why Is Blockchain A Good Fit For Logistics?
Blockchain as a technology gives its users the opportunity to create a network where it is possible to keep a track of all data in a transparent manner. This is usually done courtesy of the consensus mechanism that the blockchain utilizes.
The function of the consensus mechanism is to ensure that all the data submitted to the blockchain are synchronised and reliable. For example, in the Bitcoin blockchain, the consensus mechanism ensures a single version of all the transactions that have taken place on the chain, thus making sure that there are no double-spent transactions.
Taking this function and applying it to logistics yields an interesting result, wherein an item can be tracked from the source to the end consumer in a transparent, accessible and reliable manner. There are also a lot of products that suffer from frauding, such as diamonds and certain types of food products. This is mainly due to them being expensive, making finding fraud one of the highest priorities of any logistics company.
Blockchain will also enable the easier management of such assets, as every time the object changes hands, it can be reliably documented. Moreover, it is also immutable, which means that transactions cannot be changed after the fact. This makes it highly resistant to tampering.
How Logistics Can Use Blockchain
As mentioned previously, blockchain can track the product from its genesis all the way to the end consumer. For example, a company shipping a specific brand of wine requires to know that it came from a specific area in the world. This determines its value and is prone to frauding by parties in the system.
Using a blockchain, a ‘tokenised’ version of the bottle will be created, with an RFID tag tying it to its real world counterpart. The product is updating in shipping by scanning the QR code on the packaging at every stage, which will be uploaded to the chain and preserved, along with metadata.
This approach allows consumers at the supermarket to simply scan the code on the bottle and see exactly where the product has come from. They can also refer to important information such as the date of packaging, and quality standards maintained during shipping.
This creates an environment of verification for the end product, which ensures a more robust consumer experience and decreased fraud. However, the use of blockchain has a much bigger benefit to the logistics ecosystem.
How Blockchain Can Change The Face Of Logistics
An example of what is possible can be seen when looking at IBM’s Food Trust blockchain solution. The network utilises blockchain to provide both visibility and accountability in the food supply chain.
This is done by utilising blockchain to create a shared record of food system data. Moreover, the network is permissioned, and completely immutable. The network itself contains producers and facilitators, from growers to transporters to supermarkets.
The shared data is harnessed in such a way where it is possible for the food itself to be improved in many ways. The transparency afforded by the blockchain enables participants to reduce waste, keep food fresh for longer and ensure food safety.