Blockchain in logistics: Forging a path to accuracy, trust and agility
By rewriting the rules of how trusted networks are created, blockchain is quickly becoming a game-changer in the enterprise, and this is especially true in the logistics industry. Blockchain can help pave the road to increased accuracy, improved trust and greater agility.
Blockchain isn’t new. Conceptually introduced in 1991 and popularized by bitcoin in 2008, blockchain started entering the mainstream of enterprise computing with numerous commercial solutions emerging in the marketplace in 2014.
Blockchain technology comprises a series of “blocks,” each typically serving as a stored transaction. The series of blocks are referred to as a ledger, and these ledgers are almost always distributed on a peer-to-peer network. A blockchain is a decentralized, distributed digital ledger used to record transactions across many computers — meaning that record cannot be tampered with. Nodes across the distributed ledgers reach agreement on each nodes’ ability to add and change the ledger. A shared ledger makes it immutable, which is seen as a strong feature of blockchain.
Blockchain = Trust and Transparency
“We are at the beginning of the next revolution, where Blockchain technology will lead the world into new and exciting opportunities, with the key values baked into the heart of the Blockchain technology: Trust and Transparency.”
“This ground-breaking technology, will allow us to own more of our data, see more transparently than ever before and trust more in our governments and businesses.”
Blockchain is an enabling technology, and it is an optimal choice for enabling complex transactions. This is important because we live in a transactional world. Data is constantly being processed and transferred around the globe on a large scale, and blockchain allows these transactions to occur more quickly, more securely and more transparently. In the process, blockchain can underpin the fabric of enterprise systems, processes and procedures.
As customers increasingly rely on mobile technology to make transactions, enterprise back-end systems are struggling to keep up. Blockchain can be used to supercharge the back-end processes and procedures that drive an enterprise by automating these processes. This results in faster processes and improved efficiency.
When implemented properly, blockchain can deliver many more important benefits to the enterprise. These include improved quality assurance, better traceability, higher cost-effectiveness and the ability to enable peer-to-peer global transactions. DXC Technology recognizes the potential of blockchain technology, and technologists at DXC Labs have identified and produced industry-specific proofs of concept for:
- Retail: Tracking retail product pedigree end-to-end at any point in the supply chain
- Pharmaceutical: Providing a framework for drug counterfeit checking
- Manufacturing: Proving supply chain security for procure-to-pay and order-to cash processes
- Insurance: Developing a framework for the European Union’s General Data Protection Regulation (GDPR) consent
- Healthcare: Building provider credentialing services, including self-sovereign identity
- Logistics: Implementing end-to-end supply chain visibility and audits
Having developed a series of repeatable use cases, DXC recognizes the value that blockchain can provide across these industries. For the logistics use case, we have identified three key business drivers for blockchain adoption:
- Accuracy: Blockchain provides an accurate, immutable source of stored transactions
- Trust: Blockchain enables a distributed network of trusted nodes
- Agility: Blockchain gives enterprises the ability to transact with no fraud and with immediate reconciliation
An industry in transformation
Consumer behaviour is quickly transforming global commerce as we know it, and logistics is no exception. Digital adoption and consumption methods are driving new behaviours and opening new avenues to create trust between the enterprise and consumer. Platform consumption models have transformed businesses, particularly in the music and hospitality industries. Consumers’ choices and patterns of use mandate how a platform provider and content provider must react. Consumers also want the assurance of authenticity for a retailer’s products.
These changes have an impact on the logistics industry. When a consumer expects to receive a shipment, knowing exactly where it is and when it will arrive is becoming the norm. Brands that provide a satisfying customer experience through the complete life cycle of a product or service will be more successful, and crafting a positive experience for the customer includes the procurement and delivery experience.
The logistics experience is now much more than providing a vague time slot of when a package is to be delivered. Last-mile providers are specifying time slots of 30 minutes and allowing for changes and interaction directly with the consumer. Consumers drive demand, and demand drives a requirement from the logistics provider.
In the logistics business, it is important to be able to deploy technology that allows for product tracking in real time, temperature and vibration sensing, and counterfeit detection. Tracking of the driver and assets along with dynamic route planning are also ways that provide a truly connected experience and visibility for the consumer. The logistics industry still must contend with monolithic supply chain systems that do not integrate, include multiple providers and involve a series of legacy processes.
To deal with these challenges, logistics businesses are adopting digital technology, but the larger players have large transformational challenges. As these challenges become more complex, blockchain technology can help (see Figure 1).
Figure 1. Customer-first Track & Trace blockchain solution
Enabling digital transformation
Blockchain applications allow for digital transformation across the supply chain. Blockchain technology enables the supply chain to transform from a series of legacy monolithic processes to a faster, smoother system that is supported by a fabric of auditable, transparent ledgers. At all stages, the transparency and visibility of transactions across the supply chain is upheld. These specific use cases are relevant to the logistics industry:
- Last mile. What happens in the last mile in terms of customer experience can reflect on a retailer’s brand. A seamless experience with full visibility of the driver’s location, the time slot for delivery and the safe delivery of a quality item with quality packaging will drive future consumer demand and brand loyalty. From the logistics provider perspective, complete visibility of the product across the end-to- end supply chain, including temperature and vibration, are values recognised by blockchain. The efficiency of the supply chain and visibility of this can deliver more cost-efficient operational models. The information held in blockchain can be trusted and can help drive future prediction models and transparency for audit purposes.
- Dispute resolution. On any given day, more than $100 billion in goods is tied up in disputes. The visibility and transparency of blockchain removes any need for third parties to mediate in disputes. The ledger in blockchain is immutable, and the audit trail is trusted.
- Source to cash, procure to pay. All logistics suppliers aim to reduce the days sales outstanding (DSO) performance indicator. Procure-to-pay process efficiency is affected by this key performance indicator (KPI) indirectly. A logistics business is asset intensive, and providing accurate measurements of the costs of sale and revenue collection is paramount. The transparency and visibility provided by blockchain improves efficiency across the supply chain, including freight and shipping across international borders.
- Employee onboarding. Attracting and retaining talent is an oft-overlooked function. Blockchain applications allow for immediate verification and transparency from employee to employer using sovereign identity applications. Reducing a four-week process to a single day means productivity and essential skills are made available where required. We see self-sovereign identity growing across markets and government services over the coming years.
The future of blockchain
Blockchain is no longer a solution looking for a problem. In logistics, we see blockchain providing accurate global visibility of the end-to-end supply chain, allowing enterprises to build on this trusted data source to improve the efficiency and agility of core legacy processes. The fabric of blockchain underpins the business and allows for digital transformation, which in turn, helps deliver a satisfying customer experience. This ensures brand loyalty and that on-going transactions are maintained and improved. In sum, we are excited about the ability of blockchain technology to provide accuracy, trust and agility to companies in the logistics industry.
DXC and Luxoft deliver innovative blockchain solutions
In 2019, DXC Technology completed the acquisition of Luxoft, a global-scale digital innovator with differentiated offerings, deep vertical industry expertise and world-class digital talent. DXC designs, operates and manages some of the largest supply chain solutions in the world with many best-in-class partners, while Luxoft provides core engineering expertise in the logistics industry. DXC and Luxoft have developed a series of blockchain applications forming a fabric that underpins the end-to end logistics supply chain.