Asset utilization, prevention of cargo theft, improved tracking and rate consistency are just the beginning
Once a disparate group of entities, the modern supply chain is becoming more akin to a well-oiled machine thanks to technological advances. This includes integrated software systems that allow shippers, brokers, carriers and end-users to seamlessly “talk” to each other throughout the transactions.
But each party is still holding back, and with a more digitized approach to the supply chain thanks to Industry 4.0, that is becoming a problem. Proprietary information is but one reason, but the real culprit is trust, or lack thereof. Despite common business interests, each party in the supply chain continues to look out for its own best interests.
Blockchain technology, though, is set to alter that equation and the result will be more cooperation, more transparency, and more trust without anyone giving up their individuality.
Blockchain technology allows participants to create a digital roadmap of everywhere a driver, a truck, a pallet, a box, even an individual mango, has been in its journey, there is potential for it to both improve supply chain visibility and efficiency if participants allow it.
Take, for instance, mangoes. Global retailer Walmart is running a pilot program with IBM using a blockchain to track mangoes.
In February, Frank Yiannas, vice president of food safety for Walmart, presented at IBM’s Genius of Things Summit at Watson IoT headquarters in Munich, Germany. His topic? Mangoes.
“There are big companies, big suppliers, big countries that have an Achille’s heel. And their Achille’s heel is traceability and transparency,” he told the audience.
Yiannas explained why blockchain is important in the food supply chain by retelling the story of an e. coli outbreak in spinach in 2006.
“FDA came out in September 2006 and said, Americans don’t eat spinach, there is an outbreak going on,” he said. “You know what retailers and food service companies across the nation did? All spinach was pulled nationwide. You know how long it took FDA to trace back the source of that spinach to the original farm? Two weeks. For two weeks there was no spinach served and when it was all said and done, they found out it was one supplier, one farm, one lot, one day of production. An entire industry killed, all the farmers’ livelihoods [threatened] because they weren’t able to track and trace efficiently.”
In the mango pilot, Walmart and IBM are tracking the fruit from the farm to the store. Along the way, Yiannas explained, the mango must be harvested, shipped to a packing house for cleaning and boxing, transported – including across borders – sent to a production facility, a distribution center and finally to a store. Along its journey, proper refrigeration is vital to a safe and tasteful fruit.
Video: How goods move through a blockchain-enabled supply chain
And in each step of the journey, information is recorded in the blockchain that ensures traceability, transparency and even that proper refrigeration or other chain of custody concerns are addressed. When the customer picks up that package of mangoes in the store, they can scan a code on the package and see whether that fruit is truly organic, as the package says, and whether it was sustainably sourced.
“Traceability in the classic sense is one step up, one step back. This is the mango, where did I get it from, where did it go? It defines attributes that are what, where and when,” Yiannas explained. “Today, the way this is done in the food system is through disparate methods, mainly on paper, so you can never have a long view of the food system. You have to piece it together.
“What we believe with transparency is you can have an entire, interconnected view of that system,” he adds. “Know that the traceability attributes are important, but you can know more than just how, where and when. How was it produced? Was it organically grown? Was it sustainably sourced? With blockchain, we are collecting information at the farm.”
Eliminating the middleman
The Institute for the Future looks at technologies 10 years and out, explains Jeremy Kirshbaum, research manager with the group, and while there are certainly applications for blockchain technology use now, he says that the future possibilities are endless.
“As distributed systems become more popular, it’s possible we could have a totally autonomous company in the supply chain that is owned by no one,” KIrshbaum explains.
Could your next freight broker be nothing more than a computer? Think of the potential savings. A shipper contracts with a broker to move goods. In some cases, unknown to the shipper, that broker contracts with another broker to move the goods. Or maybe the trucking company sends that load to another carrier. The shipper is paying for this – perhaps paying for two brokers, or two carriers, and doesn’t even know it. A blockchain would identify each case of this happening and allow the shipper to pressure the broker or carrier to stop the practice or reduce the cost. Or, in a blockchain world, the shipper might be able to cut out that broker altogether, allowing protocols within the blockchain to handle all the transactions.
Might dispatchers be a luxury rather than a necessity as blockchains generate automatic scheduling of pickups and deliveries, coordinating those activities with data such as available vehicles and drivers already included in the chain?
These are the types of discussions the Institute is having today as it tries to determine how blockchain will disrupt the supply chain of tomorrow.
One potential future use of blockchain is improved asset utilization through open forecasting.
“Because data on the blockchain is widely accessible, demand data like customer purchases could be instantaneously available to every participant in the production or distribution network,” the IBM Institute for Business Value writes in a report called Trust in Trade: toward strong supply chains. “Shippers, for example, almost always receive orders only a few days in advance. This makes it difficult for them to optimize cargo or infrastructure, let alone aggregate the kinds of data they would need to forecast capacity.”
With access to better data, carriers can more accurately predict where capacity will be needed and more dynamically route their vehicles into these areas.
This kind of collaboration could also reduce inventory stock, ensuring that demand for capacity and rates reflects actual need and not artificial numbers which fluctuate widely.
Cargo theft prevention
Brigid McDermott, vice president of Blockchain Development for IBM, says that blockchain technology can absolutely help in deterring and nearly eliminating some forms of cargo theft.
One common form of theft is for a thief to identify a scheduled pickup time and shows up two hours earlier using the excuse that traffic was light. A dock worker, none the wiser, looks at the paperwork and it all appears in order, so the trailer is loaded or the driver hooks up to a loaded trailer and no one suspects anything until the real carrier arrives a few hours later. By then, the thief and load are long gone.
But, using blockchain technology, it becomes much more difficult for a thief to pull off such a heist.
“You can do a much better job as the official trucking company of being their within five minutes instead of within a 4-hour window,” McDermott says. “Two, you can do a better job of identifying who you are (with a digital copy of what the paperwork looks like and even a photo of who the driver is). And finally, nobody should be able to hack into the system anyway” because of a unique digital key that is needed to access the blockchain.
“You have a record of who accesses the system,” she adds.
While less common, another form of theft is actually driver theft where a driver delivers a few less boxes than expected, telling the receiver that was all that was loaded on the truck. Or maybe, while stopped at a truck stop, a thief breaks into the trailer and steals some boxes.
Using blockchain technology, digital verification of how many boxes were loaded and unloaded on a trailer can be combined with GPS data and even door sensors that indicate when and where the trailer doors were opened, providing a more accurate picture of that shipment. That data can be used to quickly identify the exact point of theft.
Again, it comes down to trust, McDermott says. In the case of cargo theft, who can you trust? A digital record can go a long ways to creating that trust.
A blockchain can also include passwords or key phrases to verify identify, says Kirshbaum. “Things like text are easy,” he says. “Images are a lot harder because if someone alters the source of that image, it won’t display within the blockchain. But, tracking and traceability are the perfect applications for blockchain right now.”
In addition to preventing theft of trailers and cargo by creating easily identifiable indicators to verify legitimate carriers, blockchain also has the potential to prevent theft of even a single box from a trailer.
A company called Chronicled is using encrypted microchips to track goods and prevent counterfeiters. For instance, a microchip can be attached to artwork, sneakers, wine or anything else that is frequently faked so that the buyer can verify the item’s authenticity.
The same could, potentially, be used in the supply chain by adding microchips or GPS trackers to individual boxes, pallets or trailers. That data can be added to the blockchain en route using GPS data, ensuring that every box and pallet arrives at its final destination.
In-vehicle tracking systems could also supply data to the blockchain which can verify a truck’s route, its speed, and any delays along the way. This would provide verifiable documentation for fleets to justify delays. Because each entry in a blockchain is also time-stamped, it can be used to justify detention billing.
A blockchain isn’t just for fear of theft. If there is simply not a trusted relationship between parties, then blockchain technology may be benefit to all.
“The more distrust you have, the more volatility you have in a relationship, the more a blockchain can help,” Kirshbaum says.
Regulation and maintenance
One area where blockchain technology can provide a major boost is in regulation compliance and chain of custody, particularly around food products. New FDA regulations have tightened the rules around transporting food products and have even gone so far as to stipulate when and how often trailers must be cleaned.
All this information – including the cleaning and maintenance of vehicles as well as temperature verification inside the trailer – can be digitized and easily transferred within the blockchain to authorities or shippers, as needed.
One of IBM’s use case scenarios for blockchain is vehicle maintenance. Most truck OEMs have introduced remote diagnostic capabilities where vehicles can send codes back to the maintenance shop for diagnosing and repair. But what if that repair code is tied to a recall? Maybe only some trucks in the fleet are affected by the recall because the part has already been replaced on others. Using blockchain, identifying affected vehicles could take seconds because each repair for each vehicle has already been entered into that vehicle’s blockchain.
It can also be used to track individual components of a vehicle. For instance, on-road repairs are a necessary evil, but fleets don’t always have their own shop in locations where their vehicles are. How do you know what repairs the local repair shop has performed and whether the parts used are genuine? A blockchain maintains a visible record to hold each person who performs maintenance on that vehicle responsible for their work.
That kind of granular detail provides increased visibility into the supply chain, making everyone more confident in the movement of goods and increasing on-time performance.