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.

The Growing Role of Drones in Logistics

Drone flying in blue sky

Self-driving cars, aircraft, and other vehicles have long been the holy grail for many researchers. Today, advancements in technology are making this dream come true. Unmanned vehicles are moving out of the laboratory and into the real world.

The growing role of drones in society has significant implications for the logistics industry. Suppliers are scrambling to find the most effective ways to leverage drone technology, applying it to various modes of transportation in different ways.

Air
Making deliveries directly to homes and businesses by drone is the ultimate goal of many shippers. There are many legal and technical hurdles to overcome before this dream can become a reality on a large scale, but we can transport cargo with pilot-optional aircraft right now. This has the potential to decrease costs while improving safety and speed.

Ocean
There are several ways that drone technology may impact the oceangoing freight industry. The possibilities go far beyond ships that navigate themselves across the ocean—for example, drone tech could be used to load and unload ships at shore, reducing labor costs on all legs of the journey. If these ships are designed to operate on solar power, they may need to come to port only rarely.

Rail
At cruising speed, trains are phenomenally efficient. Unfortunately, they have to stop for loading and unloading. Stopping and starting a 10,000-ton train uses a tremendous amount of energy. The trains of the future could use drone technology to unload some of their cargo without stopping.

Trucking
There is a shortage of qualified commercial truck drivers in the United States. Self-driving trucks can help fill the gap. Not everyone is comfortable with autonomous trucks, but shippers can also apply drone technology to cranes, forklifts, and other vehicles that load and unload trucks in the shipping yard.

No matter what mode a shipper is using, drones have one enormous advantage. Just like the robots in an Amazon fulfillment center, all of the drones in your shipping operation, across every mode of transport, can report their position, ETA, power status, and other information in real time, giving shippers the ability to manage their fleets with unprecedented accuracy.

It’s an exciting time to work in the logistics industry. Advancements in drone technology and other automated systems now have real-world applications affecting every aspect of shipping, from the warehouse floor to the customer’s doorstep. What does the future of logistics look like? It’s difficult to be certain, but drone technology will certainly play a large part.