Page 28 - Linkline Yearbook 2018

Blockchain in Supply Chain Logistics
Blockchain is changing the way we do business. What change will it bring to supply chain logistics? Gráinne Lynch and Ignacio Lopéz del Moral discuss its applicability to supply chain.
Supply chain operations are rife with challenges. From pharmaceutical to food, customers want to know that what they order is what they get, and giving certainty regarding origin from producer to consumer and from farm to fork, is essential. Eliminating counterfeit, fraudulent, and deceptive products from the supply chain helps protect both brand and revenue. Knowing where products have originated, are located and are destined at any one time helps to streamline reverse logistics and enables responsive recall processes.
The chain of custody, Track & Trace, throughout a supply chain is a cumbersome process to initiate and continuously manage especially where specialist handling is required. Perishable, temperature sensitive goods are often subject to additional handling criteria, which are typically only communicated on receipt. Temperature sensing in close–to- real-time of perishable goods would result in a reduction in the level of discard and destruction, leading to potential savings. This is especially pertinent in pharmaceutical cold chain operations as well as poultry, fish and flammable products.
Complete ease and swiftness of choosing partners in the supply chain and integrating them into the supply chain network has not yet been achieved. Onboarding can still be costly and time-consuming.
Foreign exchange fluctuations and the costs of banking, directly affects business operations. It would be more efficient to disintermediate (remove non-value added steps and ‘middlemen’) financial transactions and divest banks from transaction management to deliver payments in real-time.
At the beginning of a supply chain relationship, contracts are agreed and are then rarely used to influence, manage and
implicate supply chain execution. They are really only consulted when something goes wrong (Cecere, 2017).
Even when there are procedures in place for managing B2B data, track and trace information and chains of custody, all information is subject to error; either intentional fraudulent manipulations or unintentional errors.
Blockchain technology is gaining widespread support and it may help alleviate and solve the challenges listed above, thus bringing greater visibility and transparency to supply chain operations.
But what is blockchain technology?
Blockchain is an expanding list of records akin to entries in a spreadsheet or ledger (called blocks) that are linked together (in a chain) to the previous block and secured using advanced public-key cryptographic protocols. The blocks in the chain are communicated to all members in a network (known as nodes), this means that the blockchain is distributed, making it decentralised and thus mitigating risks from storing information in a centralised database. The members in the blockchain individually verify the contents of the records in the blocks, thus providing a distributed verification mechanism.
Collectively, the independent verification mechanism provides a robust degree of authenticity to a block, meaning that any alteration to a record (block) would be detected by the other members (nodes). This makes the blocks immutable, which is a great little word that simply means unchangeable. Blockchain is also known as “Distributed Ledger Technology.” There are public and private blockchains. Cryptocurrencies such as Bitcoin and Etherum are some of the best known uses of public blockchains.
28 The CharTered InsTITuTe of LogIsTICs & TransporT
BLOCKCHAIN