With more parties directly or indirectly participating in supply chains, logistics is getting increasingly complicated. This complexity is posing communication and end-to-end visibility issues, rendering logistical procedures inefficient. At the same time, all supply chain participants' expectations of transparency, dependability, and service are rising. Blockchain is developing as a potential answer to these issues. It is a distributed ledger system that can securely and permanently record transactions between participants. Blockchain eliminates the need for middlemen who were previously necessary to function as trusted third parties to verify, record, and coordinate transactions by 'sharing' databases amongst many parties. Blockchain successfully liberates data previously maintained in secure silos by easing the transition from a centralized to a decentralized and distributed system. As per the studies, it is expected to grow from $145 million in 2018 to $3.3 billion by 2023 (Source: MarketsandMarkets).
Daily operations in the logistics industry require authenticated and secure data. Therefore, let us shed light on its role in the logistics industry and how this technology can improve many shortcomings in the logistics industries.
· Data transparency: The most significant advantage of blockchain is more transparency. Instead of several parties storing copies of their dataset, each stakeholder now has controlled access to a shared dataset, resulting in a single source of truth. It ensures that everyone working with this data utilizes the most recent, accurate, and trustworthy information.
· Better Traceability: It can track modifications across the value chain and throughout all processes; it can offer detailed information on a product at every stage.
· Complete Security and Easier Identification of Attempted Fraud: Individual transactions and communications are cryptographically signed, thanks to the security procedures. It's also hard to adjust previous transactions since even minor modifications entirely alter the data's signature. It guarantees vital security and effective risk management to address today's significant risks of hacking, data manipulation, and data breach.
· Faster Payments and Easier Audits: Blockchain can enhance invoicing and payments through an efficient and secure system. When done on a big scale, invoicing may be a significant headache. Smart contracts can also assist cut down on delays and errors.
· Smart contracts: A blockchain-based system component is capable of automatically enforcing stakeholder-agreed rules and process steps. When smart contracts are activated, they become autonomous; when contract requirements are fulfilled, pre-specified and agreed-upon activities are carried out automatically.
Logistics is one of the most demanding challenges for today's businesses, and blockchain offers enormous promise in the logistics industry. However, it will take time to grow before becoming universal because of various challenges such as using alternative data storage formats, interaction with the present ecosystem, evolving blockchain technology, and information flow. However, blockchain is predicted to cause a paradigm change in logistics in the future. It will improve the efficiency of the transaction verification process and aid in the supply of goods and services through confidence among participants.