Traditional approaches are not efficient enough for managing today’s logistics operations. The blockchain offers a promising alternative.
Complex, inefficient, opaque, costly to manage — the profile of a modern supply chain management system is far from attractive. Thankfully, there’s a promising alternative — the blockchain.
In this article, we overview how blockchain technology can improve today’s supply chain management routines and explore key reasons why businesses hesitate to deploy blockchain-based solutions. We also describe FiberChain, our own blockchain network for delivery management systems. Combining the benefits of deploying off-the-shelf solutions with the benefits of developing a custom solution, FiberChain offers high efficiency and customization at a reasonable cost.
The blockchain is the next step in the evolution of supply chains
Modern supply chains are overly complex. They manage multi-step transportation of countless goods across multiple locations. And the more goods they need to transfer, the more data they have to process. This data overload creates four major struggles that weaken today’s supply chain management systems:
As a result, supply chains are inefficient and suffer from a lack of trust and visibility. In fact, a recent survey by IBM shows that 84% of chief supply chain officers name a lack of trust as the biggest challenge they have to deal with.
Blockchains can offer promising improvements to supply chain management solutions. As a technology, the blockchain is usually characterized by three words: decentralized, immutable, and transparent.
Using a blockchain for delivery management increases the transparency of every action with data. With a blockchain, you can see the full history of each transaction, including all users who have interacted with it. Furthermore, transactions are verified by the majority of network peers, which speeds up processing and leaves no need for intermediaries.
Data transactions recorded on a blockchain can’t be changed or deleted. Every action taken, every piece of data added, and every transaction processed is recorded to the blockchain, creating a thorough digital footprint for every delivery operation.
Also, the data on a blockchain isn’t stored in a data center. Instead, it’s distributed across all devices, or nodes, connected to the network. The possibility of all these nodes simultaneously becoming unavailable is highly unlikely, which minimizes the risk of data loss.
Blockchain-powered supply chain management solutions can also be enhanced with artificial intelligence (AI) or Internet of Things (IoT) technologies. This duo enables real-time tracking and analysis of the state and location of delivery vehicles, containers, and their contents.
Smart contracts are another blockchain feature that supply chains can greatly benefit from. Their immutability and automatic execution make smart contracts a perfect proof-of-delivery tool.
Now, let’s examine several real-world supply chain management tasks to which blockchains can be successfully applied.
Real-world examples of blockchain-powered supply chains
The combination of the blockchain and supply chain shows outstanding potential. Recognizing this potential, businesses are actively investing time and money into blockchain-based supply chain management solutions. MarketsandMarkets estimates that by 2023, the global blockchain supply chain market will reach $3.3 billion.
There are many ways the logistics and delivery industries can benefit from blockchains. In particular, they can effectively accomplish these tasks:
Let’s see how this works in practice and go over some real-life examples.
- Track product and freight locations — Improving the traceability of transported goods is one of the biggest challenges for today’s delivery and logistics companies. A blockchain can gather GPS data and record every change of delivery status, making it easier to track down every item. For example, the blockchain-based ShipChain platform can track containers from shipment to delivery.
- Track the capacity of truckloads — Delivery companies have limited numbers of vehicles and containers, yet they’re often forced to drive with partially empty truckloads. In the US alone, truckers drive up to 29 million miles a year with half-empty trucks. At the same time, manufacturers can’t always get the transportation they need in time.
A blockchain in transportation management can help in two ways. First, it can effectively match shippers with carriers. Second, it can be used to calculate the amount of free space in every truck or container based on data gathered from IoT sensors. This is already being done by RoadLaunch, which offers a platform for tracking and managing freight capacity, matching freight loads, tracking assets, and processing payments.
- Control product states — For many industries, it’s critical to maintain a particular temperature, humidity, or even vibration level while shipping goods. Blockchains can help manufacturers, carriers, and retailers track shipping conditions throughout every stage of a product’s journey. If coupled with IoT devices, a blockchain can even enable near real-time monitoring and control of transportation conditions.
SkyCell uses containers with built-in IoT sensors to monitor and control the temperature inside them. In this way, they ensure safe transportation of even the most sensitive goods.
- Verify product authenticity — Fake products drain the global economy and may even put people’s lives at risk. Blockchains can help businesses prevent counterfeiting by ensuring transparent tracking of every item manufactured — from the farm to the store shelf, so to speak. It can also enable end buyers to quickly validate product authenticity and track product origins.
Pharmaceutical companies like Zuellig Pharma and Real Items Company leverage blockchain capabilities to fight counterfeit drugs. Modum is another startup that uses smart contracts to address the problem of product counterfeiting, particularly in the pharmaceutical industry. They provide means for tracking the locations, conditions, and transportation statuses of goods.
Walmart is investing in its own blockchain projects while also participating in IBM’s Food Trust initiative to help Walmart customers quickly trace the origins of particular products. OriginTrail and TagItSmart have teamed up to combat wine fraud.
- Automate payments — Smart contracts are an effective proof of delivery tool. They enable real-time tracking of delivery status changes, fast data exchange between supply chain participants, and payment automation. Additionally, in contrast to traditional payment processing systems, smart contracts have no hidden fees.
Chronicled leverages blockchain, AI, and IoT technologies to enable instant approval of financial transactions and delivery traceability. OpenPort, an Ethereum-based electronic proof of delivery system, allows retailers and shippers to track delivery events in real time, streamline payments, and secure transaction records.
- Track fleet performance — Last but not least, a blockchain can help carriers monitor and audit vehicle ages, mileage, truck loads, and other parameters critical for fleet performance. Having such data is useful for determining the right time to upgrade vehicles and for making safer choices when purchasing used vehicles.
Key challenges of bringing the blockchain to the supply chain
Despite the great potential they hold for supply chains, blockchains can be hard to work with. Do the challenges of building a blockchain-based supply chain management system outweigh the benefits?
Let’s look at four key difficulties you’ll face when using a blockchain for supply chain management:
- Data can’t be changed — One of the greatest advantages of the blockchain can easily turn into a drawback if you input low-quality data. On a blockchain, there’s no way to change or delete data. You can only “update” data by making new records and adding more blocks to the chain. Yet delivery services are prone to human error: people often input the wrong addresses, phone numbers, or item names. For now, such errors are easier to fix in traditional databases than on a blockchain.
- Data privacy concerns — Blockchains offer a high level of data access. For this reason, not all market players are rushing to implement a blockchain for logistics tracking and management. Not everyone is ready to use a platform shared with their competitors, so proper measures should be taken to ensure that only the necessary amount of data is disclosed to everyone on the network. Blockchains allow you to preprogram the visibility of transactions and choose what data to disclose, so all that’s needed is to configure everything correctly.
- Lack of governance — Suppliers have strict rules they must comply with: local laws, industry regulations, international standards. But none of these sets requirements for blockchain-based supply chain platforms. And with no clear rules, it’s hard for carriers to distinguish between trustworthy and secure platforms and suspicious ones.
It’s noteworthy that industry leaders such as FedEx, DHL, and UPS have joined efforts with the Blockchain in Transport Alliance (BiTA) to establish common standards for blockchain-powered logistics solutions.
- Choosing the right implementation approach — Integrating blockchain-powered solutions into an existing supply chain ecosystem is not easy in practice. There are two basic scenarios for enhancing supply chain management with blockchain capabilities: use an off-the-shelf product or build a custom platform. Choosing the most fitting scenario is a true challenge.
Let’s look closer at the problem of integrating a blockchain into a supply chain infrastructure.
With an off-the-shelf solution, the major difficulties are finding the right product and ensuring smooth blockchain integration in delivery services. While offering fast deployment, ready solutions have their limitations. They may be incompatible with current infrastructure or the deployed enterprise resource planning system. Often, ready solutions provide few or no customization options and, therefore, turn out to be inefficient.
Developing a standalone custom solution is a sure way to address the problems of customization and efficiency. However, building such a solution requires extensive expertise in blockchain development and a deep understanding of the logistics industry. Not to mention lots of time and money.
Looking for the best way to address this challenge, Apriorit’s blockchain development team came up with a well-balanced alternative — FiberChain.
Improve your existing supply chain ecosystem with FiberChain
Apriorit developers wanted to find the most effective and effortless way to employ a blockchain for supply chain management. Our specialists came up with a solution that gets the most out of both approaches: working with an off-the-shelf solution and building a custom solution. FiberChain provides you with the adjustment capabilities of a custom product and the speed of deployment close to that of a ready-to-use tool.
This Futurepia-based permissioned blockchain network for delivery services can be integrated with any infrastructure and customized to meet your particular needs.
FiberChain provides you with highly adaptable distributed data storage and an interface for interacting with it. Storage can be customized to the specific tasks and needs of your project. You can also implement any custom logic for data processing and analysis.
The FiberChain network consists of three fixed core components along with customizable plugins.
The use of customizable plugins makes the capabilities of FiberChain almost unlimited. Asset, the main FiberChain plugin, is responsible for handling package data and delivery events. Other capabilities you may add to the network with plugins include:
- payment processing
- identity management
- сourier and delivery route tracking
- delivery progress tracking
- identity validation for customers and couriers
- and more
If there’s no fitting plugin available, Apriorit developers can implement the logic you need in a new plugin.
Unlike general-purpose smart contract-based approaches, the high adjustability of the network doesn’t come at the cost of reduced performance and more expensive transactions. The Futurepia network is highly efficient, measuring up to 300,000 transactions per second in laboratory testing. And for the registered users with a FiberChain account, all transactions are free.
Let’s see how FiberChain works using the example of a last-mile delivery operation:
- A package is assigned a unique identification tag that can be used as a tracking number. The tag can be in the form of a QR code that provides access to tracking information.
- Using this identification tag, the blockchain records every change in delivery status for this package, from moving to logistics to being handed out to the courier to being delivered to the recipient.
- Apart from recording the event itself, the blockchain keeps track of when each event was reported and by whom. This way, if the package is lost along the way, it should be easy to retrace the steps and check when it disappeared.
- Each event record is cryptographically secured, so it would be practically impossible to tamper with the data. Once event data is recorded, it can’t be changed.
FiberChain can record a history of events for any package. The event fields can be freely customized, and each package can have an unlimited number of events.
If you need to execute additional operations — verify the identities of the courier and the recipient or, say, process payments for delivery services — these tasks can be covered with plugins.
The FiberChain network provides an API that can be used by websites, desktop management applications, and mobile courier apps. Each plugin has a set of HTTP API functions that can be used by clients. And by checking transaction signatures, plugins can detect unauthorized execution, preventing illegitimate users from using the network.
As a result, it’s easy to integrate the FiberChain network into your current infrastructure. And if any questions arise, Apriorit specialists will gladly assist you with FiberChain integration.
Supply chain management is a complex process in which many operations are still processed manually. Using blockchain technology in supply chain management can remove unnecessary intermediaries, simplify the tracking of product movements, and provide detailed, transparent transportation history.
In this article, we demonstrated a possible implementation of a Futuperia-based blockchain network called FiberChain. The network can easily be adjusted with custom plugins and integrated through an API with your existing supply chain management solution. This approach is less complex and time-consuming than developing a custom platform and offers richer customization options than any off-the-shelf solution.
Apriorit’s team of professional blockchain developers can bring any challenging project to life. Contact us to start discussing your ideas.