A few days ago, DHL released a trend report in partnership with global technology consultant Accenture and provided a detailed breakdown of blockchain potential in the logistics industry. The report outlines how DHL blockchain pilot can help to ensure transparency throughout the supply chain, from supplier to consumer.
The release marks a move to test the waters with blockchain in the logistics sector. For some time, logistics companies have been in desperate need of digital transformation to improve efficiency and address operational challenges. PwC published a report in 2016 highlighting that the sector has been under greater challenges as customer expectations have increased.
In the current market, “both individuals and businesses expect to get goods faster, more flexibly, and in the case of consumers, at low or no delivery cost”. The current system, based on manually monitoring the supply chain is driving up the cost of goods, whilst obscuring the transit process. Likewise, according to DHL’s report there are an estimated 500,000 trucking companies each with their own unique transit protocols.
This industry limitation has resulted in “low transparency, unstandardized processes, data silos and diverse levels of technology adoption”. However, blockchain has the potential to address these pain points by automating and improving the efficiency of transportation management, procurement and product tracking. Blockchain and its distributed ledger applications promise to help centralize logistics processes and lean out the shipping process.
One of the key areas that DHL is seeking to use blockchain is in the counterfeit drug prevention. In order to tackle the counterfeit medicine problem, DHL and Accenture have come up with pharmaceutical serialization, where a serial number is attached to a container, which is linked to information about the source of the product. The container can then be tracked throughout the supply chain.
As their report notes, the DHL blockchain pilot is not the only initiative that intends to use this new technology to improve transparency in the supply chain. Industry giants Maersk and IBM have been working on their own system to virtualize their trade workflows and utilize “end-to-end shipment tracking”.
This system will allow individuals throughout the supply chain to view containers in transit. In addition, users and stakeholders will be able to see the status of customs documents to ensure goods have been shipped successfully. This will eliminate the need for manually checking up on the progress of dispatched goods.
This report and the activity of the BiTA board at the start of this year indicates that blockchain technology is in the initial stages of adoption. Once a successful pilot gets off the ground, we will start to see a more standardized adoption of blockchain technology throughout the industry.