It's no 'silver bullet', but blockchain can forge stronger supply chain links

Blockchain is not a “silver bullet” that will rid logistics of all that ails it, but it is more than just a buzzword and can offer tangible benefits to supply chains.

Transport Intelligence’s (Ti) latest report, Why is Blockchain a Game Changer, suggests the technology can aid accountability, collaboration, conformance, tracking and visibility.

However, it also says that, for these benefits to be truly realised, the industry needs to pour more resources into getting a better handle on the technical expertise required.

“Many companies are still gathering information about blockchain and its implications, and there is also an acute shortage of real technical expertise,” says the report.

“But this is changing due to an explosion of interest and pilot projects; blockchain’s evolving, particularly [in terms of] the number of transactions that can be processed per second.”

The technology is essentially an encrypted messaging system that allows supply chain partners to operate a shared ledger that records all the events in the processing and physical progress of a shipment, such as customs entries or bills of lading.

Ti’s report, however, cautions against the hype surrounding what the technology can offer, noting that it should not be considered a replacement for internal central databases.

Nor, it warns, should companies use it as a control or validation system for a known group of users that rarely changes, or as a data storage platform.

“Do consider blockchain if you need to capture and/or share data from a variable number of suppliers, partners, customers,” the report advises. “This is especially true if many of them do not know each other, are competitors and need to use a verified, immutable and accurate single version of the truth.”

Problems surrounding regulation also need to be addressed, according to Ti, although the report notes that legislation is a “grey area” for all emerging technologies.

And it adds that legal frameworks are coming into play, highlighting Slovenia as something of a “pioneer” in this regards.

“But it will be some time before the situation is clear, which implies that dispute resolution will be an issue for some time,” says the report. “This is not a reason to do nothing, but it is a reason to proceed with caution before any significant investments are made.

“As a reference point, exactly the same applies to driverless vehicles and drone operations: the projects are still happening, but their legislative boundaries are constantly evolving.”

The full report is available from The Loadstar shop