Digitizing the Supply Chain With Blockchain

Digital chain representing blockchain.

Every day, products appear on shelves around the world and wait for consumers to pick them up and purchase them. Most people don’t care how the products got from the manufacturer to the store.

Consumers may not be terribly concerned with the logistics behind the process, but every intermediary between the producer and the retailer has a vested interest. Intermediaries are always looking to improve efficiency to increase their profit margin, and when goods don’t arrive intact and on time, it’s up to them to cover the cost of the loss.

It’s important to the world economy that logistics professionals have confidence in the supply chain, but it’s not uncommon for them to have doubts from time to time.

Tracking Shipments at Every Stage

What is the solution to a lack of trust in shipping? As with many problems, more information. Tracking shipments as they move through the supply chain is just the beginning. Today’s carriers are integrating information not just from their drivers and depots but from current weather and traffic conditions as well.

Managing all this information and ensuring that everyone has access to the same data is a challenge. Blockchain could solve the problem.

What Is Blockchain?

“Blockchain” is a popular buzzword in the media, but many people do not understand what it means. In simple terms, a blockchain is a distributed database stored on a wide network of computers. Any individual with the proper credentials can access the database and review every transaction stored in it.

Blockchain is a natural fit for the logistics industry. There are three advantages to using it in the supply chain:

1. Better Security

Because there are multiple copies of every blockchain database, it’s virtually impossible to make unauthorized changes to the information the database contains. Every other system on the network must validate and accept every change. Because it’s easy to track the source of every transaction, blockchain databases are resistant to fraud.

2. Enhanced Trust

One of the big advantages to blockchain is the fact that every stakeholder has access to the database. If there’s ever a controversy between multiple entities, there is a master record of every transaction everyone can refer to.

3. Reduced Cost

Every supply chain includes inefficiencies. Since the database records every transaction along the supply chain, it’s easy to discover and eliminate inefficiency.

Blockchain may not be the miracle cure for every business problem that some believe it to be, but it’s certainly a useful game changer. Relying more on blockchain technology in the supply chain can improve logistics by leaps and bounds.

How Do Consolidation Strategies Compare?

Empty truck ready for shipments to be loaded.

We live in an on-demand world. Consumers are increasingly used to having their food, entertainment, and even packages the instant they want them, which has driven a steady growth in online retail over the last 10 years. In 2019, online retail purchases accounted for 16% of all retail.

What does this mean for shippers? Consumers and sellers expect them to make many small deliveries to homes and offices rather than a few large deliveries to major retail stores. Unfortunately, delivering all these small shipments is inefficient. Large trucks may pull half-empty trailers for much of their route, wasting space and increasing carbon emissions.

Consolidation Can Help

Consolidation is a logistics strategy in which multiple shipments headed for a particular region are combined in a single large container. Once the large container reaches the area, the contents are broken down into smaller shipments and forwarded to their destination.

There are a few different ways to maximize consolidation:

1. LTL Zone Skipping

Shipments that don’t fill an entire trailer are known as less-than-truckload (LTL) shipments. LTL zone skipping is the most basic consolidation technique. Shippers combine all the shipments headed to a region into a single shipment delivered by a long-distance carrier.

Once this shipment arrives at its destination, a full-service logistics provider distributes the cargo locally. Shippers at both stages of the process are trusted to use their different expertise efficiently.

2. Multi-Buyer Consolidation

Retail stores sell products from many vendors. If every vendor delivered their own shipments to every location, it would be inefficient. Most small vendors don’t bring enough products to a store to fill a truck or trailer. In the multi-buyer consolidation model, each vendor delivers their products to a regional facility, which then loads goods from multiple vendors and ships full truckloads to each location.

3. Single Buyer Consolidation

Because of scheduling and other considerations, a single vendor may send multiple shipments to a single retail outlet. Many of these shipments are not large enough to fill entire trucks, so a vendor’s loading dock may end up crowded with many trucks and trailers, reducing efficiency for everyone. Single buyer consolidation depends upon the vendor’s willingness to wait to ship their products until they have enough to fill a truck at once.

Consolidating truck shipments saves shippers time and money. It requires forethought, planning, and cooperation, but the efficiency benefits make it worthwhile. Advancing technologies such as transportation management systems are helping carriers decide which consolidation strategy is most useful for a given situation.

Making Air Freight More Efficient

If you work in logistics, you’re managing cost, efficiency, and speed with every shipment. Every time you choose a shipping mode, you’re making a compromise among these three attributes. Air freight is usually the fastest option, but it’s also the most expensive.

Despite the price, air transportation is the best choice for certain shipments. It’s an essential element in supply chains involving time-sensitive, fragile, or perishable items. No other mode can match the flexibility, speed, and security of air freight, and logistics organizations are taking steps to make it even more efficient than it is already.

On February 18, 2020, The International Air Transport Association (IATA) and the International Post Corporation (IPC) signed a memorandum of understanding outlining their new cooperative efforts to improve the efficiency of air freight and airmail, agreeing to work together toward these six goals:

1. Developing Industry Standards

Different carriers use their own solutions for managing both the physical and electronic procedures involved in air freight. Developing industrywide standards will improve efficiency when multiple carriers are involved.

2. Implementing Piece Level Tracking

The air freight industry is moving to implement technology-based standards to improve piece level tracking, which allows shipments to be tracked at a low level of consolidation (before they’re grouped into pallets or unit load devices).

3. Improving Efficiency for Small Packages

Small packages are sometimes much less efficient to ship than large packages from a shipper’s point of view. Improved navigation and booking procedures are intended to close this efficiency gap.

4. Improving Security

Security is one of the major selling points of air freight, but there is always room for improvement. Together, the IATA and the IPC are working to make security even better with improved procedures for the handover, carriage, delivery, and settlement of air cargo.

5. Including New Partners

There aren’t that many successful carriers in the air freight industry, and it’s difficult for a startup to attain success. Efforts to improve optimization and standardization across the industry will include new partners and encourage healthy competition.

6. Soliciting Industry Feedback

To date, the IATA and the IPC have operated with limited input from the carriers they serve. Now, they are soliciting additional feedback from ground handlers and other industry stakeholders.

Air freight will always be an essential part of logistics, and because the industry is working to improve efficiency, security, and speed for all stakeholders, it will remain a crucial mode of transportation for decades to come.