I am sure that each and every one of you has been bombarded with information, mostly abstract, about Blockchain and specifically Bitcoin.
But how much do you actually know about Blockchain?
How is this new type of technological improvement capable of shaping the international freight forwarding industry?
In this article, we will try to gain a better understanding of the definitions of Blockchain and Bitcoin, while learning together how this technology can change the landscape of supply chain.
To begin with, Bitcoin is a method of making transactions but with no central monetary authority meaning that, unlike traditional banks, Bitcoin does not rely on a certain entity to monitor, approve and manage these transactions. In other words, Bitcoin is the exchange of cryptocurrencies in a peer-to-peer computer environment with anonymous users.
On the other hand, blockchain enables the recording and storing of Bitcoin transactions, but its full potential lies far beyond Bitcoin. Blockchain is a fast and secure method of transferring funds anywhere in the world. The transactions take only a few minutes to complete and they are made directly between payer and payee without the need for traditional banking systems.
Transaction volumes have increased substantially after the advent of the Internet of Things (IoT), and they require new systems that minimise the inefficiencies, delays and costs of traditional transaction systems. The same process that required an intermediary to verify and account for all transactions, now it can include only the direct parties.
International freight forwarding is an industry associated with limited transparency and inconsistent information about the products and the payments. The rise of e-commerce and the technological improvements of computers and IoT, have led to increased transactions across the globe that require a compatible system for all the users and networks with different currencies.
There may be $4 trillion of products shipped each year, but product lifecycles are getting shorter and the demand is more intense. Blockchain technology can transform the supply chain industry by providing a safe, private, permissioned and transparent network. In an industry in which many different parties are involved in the financial transactions, blockchain can make certain data visible to certain entities and speed up the process of shipping.
We are confident that the use of such technology will improve supply chain management and will deliver value by eliminating the friction points, such as delays, lack of visibility, bureaucracy, fraud and many more.
Now, stay with me to find out the way blockchain works and how you can leverage on this system to boost your profits.
How Blockchain Works
In the blockchain, every participant is called a node and every node can receive and publish transactions to other nodes, with all the data being recorded and synchronised across the network. A permissioned network means that the entities are entitled to see only the transactions for which they have authorization. To demonstrate an example in the supply chain, nodes can be the manufacturer, the supplier, the buyer, the airline, the logistics company etc. These nodes complete transactions with each other but not all nodes have to have access to all the transactions. They can see when a transaction is made but that includes no other information. Thus, the supplier can be authorised to view only the transaction between him and the manufacturer without knowing the exact amount of the other transactions among the other participants.
Further, the majority of participants must validate the transaction. A Proof of Stake provides the nodes with a certain percentage of the network’s total value, enabling them to validate the transaction. The Practical Byzantine Fault Tolerance (PBFT) is an algorithm used to solve disputes among the nodes. Finally, a smart contract holds a set of rules that govern the financial transaction and it is automatically executed during the transaction.
Blockchain basically enables any number of participants from any location to have access to the system. However, a system as such, is guarded with maximum secure algorithms that can lead out of sync anyone who tries to manipulate the system. Moreover, a transaction, once made cannot be reversed. Only a new counter transaction can cancel the previous one.
Last but not least, one of blockchain’s core capabilities is that a product can appear only once in the system and no duplicates can be created. Everyone in the transaction system, can have full visibility on the exact location of the product as the information is being constantly updated for everyone, within minutes.
Benefits of Blockchain For Your Business
It’s now time to see how you can use blockchain to achieve efficiency and greater performance for your products and your company.
Blockchain enables the completion of transaction without the use of intermediaries. As such, delays can be prevented and duplication of effort can be reduced. You can better manage the flow of your products, arrange sufficient levels of inventory and even share information about manufacturing process, warehousing and distribution practises with the other participants. Optimizing the entire pipeline is something that could be accomplished through blockchain driving your company’s performance up.
Information is simultaneously distributed across the network; thus, participants are aware of the location of the product at all times. Lack of transparency was always a pain point in supply chain. People couldn’t be sure where their products were and at what condition. However, the development of blockchain makes it easy to track your shipments, so you can better manage resources, control the available inventory and make better and more accurate forecasts.
Apart from the above, in the blockchain system, the documentation is visible to all members allowing for its review and verification of authenticity. In such a way, you can monitor purchase orders, receipts, change orders and basically every documentation that is needed in the freight forwarding services. In addition, you can track the quantity of your shipment and the transfer of assets such as pallets, skids etc, while linking the products to their bar codes and sereal numbers. Finally, information about the quality of the goods such as temperature, humidity can be stored into the blockchain system and it can facilitate and speed up the shipping of goods across all the different parties.
Blockchain, can help you to achieve not only efficiency for your company, but also better communication with the other participants in the supply chain. This, will lead to enhanced trust between you and the other members of this partnership.
We, at Haulystic Innovations, care about the future of your business and that is why we always provide you with up to date information and tailored logistic solutions for air freight, sea freight, ground freight, warehouse, customs in specific business flows such as e-commerce, pharmaceuticals, cross borders, commercial freight forwarding and postal supply chain.
Let’s proceed together into the future!
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