Blockchain – the New Driving Force in Supply Chain and Logistics

You may have heard of blockchain in connection with the Bitcoin. It is the technology used to create and maintain the cryptocurrency environment. However, this is not just an obscure and highly specialized technology – in fact, it is hailed as the changing force behind many industries, including packaging, supply chain and logistics.

What Is Blockchain?

Blockchain consists of decentralized digital ledgers. Information is stored in data blocks. These blocks are distributed in real time among all the parties that have access to the information. Each party has an exact copy of the information available to the other parties. As soon as one of the parties makes a change to the blockchain, this change is automatically propagated to all the other parties.

The key features and benefits of blockchain are:

  • Speed – the information is transmitted from one party to another on a peer-to-peed basis, without the need for intermediaries and other third parties;
  • Transparency – each of the parties can track the data block to its origin and see all the parties that have access to it and the changes they made to the blockchain;
  • Accountability – every party knows that their actions are available to the other members who share the blockchain;
  • Security – the blockchain is stored as data bits in various nodes (servers) across the globe, making it virtually impossible to compromise or delete it.

All the industries, not just logistics, packaging and supply chain, are currently searching for ways in which they can attain these benefits. And top leaders from large companies in various key industries – finances, manufacturing, business services – have come to the realization that they have the answer: blockchain technology itself.

How Can the Logistics Industry Adopt Blockchain?

The first and most important thing to understand is that industries do not need to change their processes and practices in order to adopt blockchain. The technology is very flexible and can be adapted to suit the needs of various industries.

Let us just look at a few potential use cases in order to understand how it works:

1. Managing the Logistic Flow of Packaging Materials

At Logistic Packaging, we see some customers renewing their orders for plastic pallets or containers sooner than we expected. The reason: their packaging materials are either stuck en route from the client, misplaced by the client or by their own employees among various warehouse locations.

How could blockchain help? With RFID tags or other digital markers embedded on packaging materials, each pallet and container is easily accounted for. As soon as there is a change in its location or status (waiting to be load, loaded, delivered to client) the information is added to the blockchain and becomes available for all the persons who have access to it:

  • The logistic manager of the supplier
  • The warehouse manager
  • The client’s warehouse manager
  • The client’s purchasing manager.

2. Reliable Product Traceability

Safety is very important for all kind of products, but it is paramount for two categories: food and pharmaceuticals. The logistic and packaging industry has developed a series of special reusable packaging materials for these two industries in order to respond to the needs for increased safety:

  • Thermo-insulated inserts for shipping totes;
  • Storage containers with seals;
  • Hygienic/cleanroom plastic pallets.

However, there is always the risk of products being compromised or tampered with during shipping. Once companies rely on blockchain for supply chain transactions, this situation can be mitigated. Changes to the status of the products will become available as soon as they occur.

Thus, the shipment can be stopped in transit to remove the dangerous products and avoid cross contamination with others. Or, in case of a single batch of contaminated products, they can be traced back to the place of origin of the raw materials in order to contain the spreading of danger and reassuring the consumers.

3. Smart Contracts between Logistics and Packaging Suppliers and Clients

At Logistic Packaging, we are always striving to meet our clients’ needs and even anticipate them. But there are limits to the speed with which we can access and process market data in order to understand industry trends.

Once blockchain becomes a mainstream technology in our industry, we will be able to react faster to customer demands. Orders will reach us instantly and confirmation will be also instant. Our customers will know at every moment the status of their order and the precise date and hour when they can expect their products to be delivered.

Until blockchain becomes a reality, the Logistic Packaging team is striving to apply the best technologies and business practices to solve your packaging and logistics issues. Send us an email or schedule a live Skype call to discuss your project with us!