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Blockchain as a Technological Tool for the Supply Chain

By Héctor González - SafeLink Group


Héctor González By Héctor González | BOA President - Thu, 06/09/2022 - 13:00

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The transportation of goods as we know it today depends on a collaborative network of multiple actors that make up the logistics chain, each from different parts of the world, on different schedules and in different cultural environments.

The standardization of processes is essential for the correct and safe coordination of goods, which is why more and more new and reliable technologies are being implemented to avoid the margin of error in the operation.

Blockchain is a new set of technologies within which there is a whole network that allows the storage of databases with a distributed, secure, and synchronized record.

It is mainly focused on storing information, transferring data, and validating or confirming it, thus forming a gigantic and permanently interconnected data structure.

The blockchain network follows four axes that allow its encrypted operation: it is anonymous, open, decentralized, and public.

These blocks contain encrypted data of movements and transactions where each one is perfectly protected and linked to each other in such a way that it eliminates the verification of a third party or intermediary in the operations as they are intertwined blocks.

In this way, blockchain can be defined as a large ledger in which all the information related to accounts and their records are located within encrypted and linked nodes that protect privacy and provide security in the processes.

Blockchain Implementation in Logistics, International Transportation

Now that we know more about this network, we can talk about its application in logistics and international transportation, since blockchain allows us to know the status of a product from its point of origin to its destination. This is all in real time, which means a more agile and efficient service for the end customer, in addition to promoting constant and effective communication between the participants in the process.

From another angle, the activity history of each supplier is correctly recorded over time, in addition to the fact that these records are unalterable, which provides secure traceability.

The application of blockchain in the supply chain has been implemented by companies such as Maersk and Walmart, which have teamed up with IBM to develop a system that makes real-time tracking possible.

For example, Walmart conducted two successful experiments using this blockchain application: it tracked pigs in China and mangoes in Mexico to their destination.

Maersk is a company that has also started to improve its shipments and tracking through blockchain. The shipping leader employed this technology to track the movement of its cargoes along international borders, all with the intention of improving delivery times by tracking and acting on time to improve routing in case of incidents. But how else has blockchain developed in logistics?

Satellite Monitoring and Custody

The combination of blockchain technologies with other tools that assist in specific parts of the supply chain can exponentially optimize cargo security.

As previously mentioned, the blockchain provides a large amount of information about goods: however, it does not protect them from external situations along their journey, nor does it protect the transport that moves them.

However, it is possible to complement this network with a satellite monitoring and/or custody service. These two security measures implement constant surveillance of the unit that transports your merchandise in order to know the route that the driver is traveling and the possible difficulties that he may face.

These technological tools accompanied by blockchain, also help in aspects such as:

● Route optimization

The blockchain with satellite custody combination possibly provides the greatest benefit in freight transportation logistics.

Through the combination of these information and geolocation systems and based on data obtained in real time about the vehicle transporting the cargo, it is possible to optimize routes, reduce delivery times and save fuel.

● Lower accident rate

With the creation of intelligent routes based on data, such as distance, average vehicle speed and idle time, it is possible to locate the places and times where the driver should stop to sleep, as well as avoid dangerous places and routes with difficult climates for a heavy vehicle.

● Prevent robberies and assaults

Through intelligent routes, it is possible to create geofences (measures to maintain control of transportation units); for instance, perimeters and zones from which the unit will not be able to leave without the system issuing an alert.

If this happens, this would clearly represent a signal of an anomaly or problem that must be acted upon immediately.

But this is not all that the blockchain alongside other technologies can do.

Smart contracts: What are they and how do they complement the security of your goods?

Smart contracts, which were conceived with the aim of reducing costs for the end consumer by excluding intermediaries and making processes simpler, have taken logistics to the next level of artificial intelligence and information technology.

These smart contracts are actually computer programs, in which the different parties define the object of the agreement, the actions that can be performed on it and the application clauses. When any of the conditions and linked clauses are fulfilled, they are automatically executed.

One of the activities that a smart contract can execute, for example, is to refund a deposit or collect taxes on a transaction.

Being within the blockchain network, smart contracts are distributed among all nodes in the network. Once the information has been verified, the contracts are validated, thus preventing them from being manipulated by any of the parties.

In this way, a smart contract executes itself, without the intervention of any third party or intermediary.

The application of blockchain, especially in logistics, is still at a very early stage and few companies are using this technology; however, it is a new solution that in the future will provide much to talk about.

Constant growth and innovation are a primary need in any company, so being aware of new trends and knowing how to implement them, as is the case of blockchain and the complementary tools we have just talked about, is vital for your business.

Photo by:   Héctor González

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