Technology has always been a cornerstone of some key economic sectors. But especially at key moments in production and distribution processes. This economic ally still plays an important role, and will continue to do so in future, with the addition of helping businesses take advantage of the innumerable benefits that technological developments linked to innovation can bring. Blockchain technology is already being applied as we optimise supply chain processes, leading to a number of significant improvements and benefits.

How blockchain technology can be applied in logistics

There are various stakeholders involved in any given logistical process. That’s why centralisation isn’t always the best approach, because if there are any shortcomings or failures at any key points, the entire chain will suffer the consequences. As such, blockchain technology can step in to offer a number of tangible benefits, given it’s a technology in which the decentralisation, reliability and encryption of information are key.

Within a blockchain network, every time data or information is exchanged, that transaction is encoded in ‘blocks’ or links. Each of these ‘blocks’ needs to be verified and given the ok by various agents within that network – which isn’t centralised, but rather horizontal – at the same time. Once a block has been verified, it becomes a permanent part of a blockchain that can never be changed or deleted. This provides enormous strength in terms of security, traceability and confidence in the integrity of that information.

So when blockchain is applied in the world of logistics, it’s perfectly possible to register and authenticate product barcodes, for example, as well as exhaustively monitor each and every step of the process within the supply chain. Regardless of how many components these distributed networks of ‘nodes’ or participants have within a blockchain, any attempt to modify the information, or any alterations not previously agreed, will be immediately detected by all participants in the process.

Benefits of using blockchain in the logistics sector

Sometimes, processes developed over time in supply chains are incredibly complex, since there’s no single agent involved, they’re not always reliable and information security is essential to achieving objectives efficiently. But blockchain can eliminate – or at least definitively reduce – these ‘rough edges’. Applying blockchain technology in the world of logistics:

• Improves the coordination of the documentation needed to validate and identify shipments.
• Eliminates paper in document management processes.
• Facilitates the rapid adoption of strategic decisions, without losing out on efficiency.
• Means blockchain-based smart contracts can be drawn up at various stages of the process – or even covering the entire process, where necessary – and compliance can be monitored in real time by every stakeholder involved. Compliance can be linked in such a way as to automatically launch the next phase in the supply chain, significantly boosting logistical strength.
• Improves efficiency in import and export processes.
• Means all data exchanged is both reliable and secure, as well as being encrypted and kept out of reach of any third parties. This high level of trust also helps boost competitiveness.
• Reduces costs significantly.

Obstacles to overcome in future

Although blockchain technology can offer all the benefits outlined above for the logistics sector, a number of things need to occur before its definitive and widespread adoption can be rolled out. On the one hand, there’s a learning process required in order to help people understand how this technology works and its specific applications. On the other hand, we need to see more development of devices and applications to facilitate its proper use.

Furthermore, we need to design and implement proper protocols to standardise blockchain as a foundational technology upon which supply chains can be improved, both nationally and internationally. And, last but not least, we need to have the legal and administrative mechanisms in place to allow for the full adoption of unified administrative criteria for all the different potential scenarios at play.