James Robbins, CIO at two-person home delivery specialist ArrowXL, examines how developments in blockchain technology could enhance the distribution process for manufacturers, logistics providers and end consumers
The sheer number of headlines being written about blockchain has grown dramatically as more and more organizations across various sectors adopt this innovative technology. Over the past year, it has already shown to have made tangible progress in markets including finance, real estate and healthcare. With blockchain spending now expected to increase at a rate of almost 75% annually until 2022, how can companies operating within the logistics and supply chain industry best use it to their advantage?
What is blockchain?
For many years, the cloud has encouraged brilliant levels of innovation and new services that can be quickly, reliably and cost effectively deployed. The latest, blockchain, is now being used to deliver absolute confidence to the user and real-time authentication while minimizing the risk of fraud.
In simplistic terms, blockchain is a digital receipt that can effectively replace paper-based proof of ownership with encrypted, secure and unique records. The technology is used to automatically update and reconcile a distributed and unalterable ledger in real time. The ledger is maintained with records or transactions in the form of ‘blocks’. The blocks of information are added to the ledger in sequence to form an ever-growing ‘chain’, in which each new transaction contains a record of every previous transaction. Every single operation is recorded and cannot be altered, which delivers a level of trust and certainty previously not afforded to businesses and consumers alike.
Applying blockchain to the supply chain
ArrowXL is proud to deliver thousands of products into consumer’s homes each day and while we are responsible for the final leg of the journey, many of the dishwashers, sofas and freezers we deliver have been on extensive and complex journeys.
Consider your typical 50in, ultra HD TV, built by a manufacturer in China – this product is removed from the factory and put on to a ship where it sails half way across the world to a UK port. Once removed from the ship, it will usually be collected by a logistics/fulfilment company on behalf of a retailer, which transports the TV, along with many others, to its own warehouse. At this stage, a consumer will purchase said item, which is then transported to the retailer’s carrier. The carrier would typically move the item to its own sub-depot, before it is loaded onto the vehicle. Upon reaching the delivery address, the TV is signed for by the consumer, who may have bought the product outright or chosen a monthly payment plan.
When you reflect back on this journey, the sheer volume of paperwork and record keeping that accumulates at every touchpoint is significant – from documenting the serial number at the factory at the very beginning of the process, to confirming the consumer’s credit agreement and receipt of goods at the end. Not only is this subject to human error but it is a time-consuming and costly process, as well as being bad for the environment.
If this journey was recorded in blockchain, with each major touchpoint recorded as its own block, there would exist an irreversible sequence of information that provides absolute certainty for any stakeholder.
Similarly, this efficient model can also be used to eliminate fraudulent activity and provide proof of ownership for high value items, which would be valuable for someone looking to buy a classic car or a work of art.
Blue sky thinking
I recently attended a technology event that focused on supply chain and blockchain was briefly discussed. As a result, it triggered some ‘blue sky thinking’ during my train journey home. I think it would be a fascinating idea to place SIM cards or near-field communication (NFC) technology into TVs during the manufacturing process, which can then be used in combination with blockchain to determine if products go missing – and if so, you could pinpoint exactly where. Moving forward, there may even be a case to incorporate sensors into certain products, so you can establish at exactly what touchpoint along the supply chain an item was damaged – from the consumer’s home, right back to the manufacturer’s factory in China.
While those concepts might be a little way off – currently from a cost point of view – blockchain is certainly making a huge impact across various sectors, with great success. I would like to see more logistics and supply chain businesses explore new ways in which they can take advantage of this new technology to work smarter, improve communications, and enhance security.