Blockchain, the transportation industry and large retailers, a magic combination?
Can Blockchain help decrease the $140 billion in payments that are the subject of litigation in the transportation industry, lower large retailers costs and give end users more trust about what they are consuming?
By Marc Toledo (Managing Director of Bit4you)
Bit4you.io being a crypto exchange, is acquiring more and more blockchain knowledge everyday. One of our shareholder who is active in the large retail industry, asked us to study how blockchain could impact and improve his business. In this article, we wanted to share with you our analysis on how blockchain and IOT may impact their supply chain, decrease their operational costs and improve customer trust and security.
The industry of transporting goods
Today, supermarkets are sourcing all over the world to supply us all year round with all the products we consume. This requires the transport of goods involving many companies. Their often very complex interactions are inevitably leading to errors and even fraud.
More than $140 billion in payments that are the subject of litigation in the goods transportation industry
For example, according to the Revue d’actualité France 3 on Thursday the 8th March 2018, the shipment of refrigerated products from Africa to Europe involves more than thirty organisations and results in 200 different communications. As a result, there are more than $140 billion in payments that are the subject of litigation in the (goods) transportation industry due to confusion between invoices, reciprocal disclaimers, etc.
Blockchain involvement?
Distributors such as Walmart are also involved in the blockchain with IBM. It should be noted that there is a rule that all potentially suspect food products must be presumed contaminated and therefore recalled or simply discarded. By increasing traceability, where appropriate, it will be possible to establish whether or not a batch of food products has been in contact with a contaminated batch and thus improve food safety and reduce costs.
blockchain will therefore make essential information accessible and unforgeable to consumers
On the other hand, the blockchain will therefore make essential information accessible and unforgeable to consumers such as the origin, the original authentication of products, certificates (organic, vegan, kosher, halal, sustainable fishing, fair labor, …)
Blockchain technology combines chain of custody control with document transparency. This creates an ecosystem that allows all stakeholders to instantly and immutably know all the documents required at each step thanks to the transparency of the system.
The beauty of the blockchain is that it allows you to securely transmit data that people were sending previously to each other by email, as attachments, that were difficult to classify.
The blockchain is based on:
- Transparency: everyone can see what is happening at any time.
- Decentralisation: blockchains operate in a network, so no single company can take control of them.
- Security: the data in a blockchain is not falsifiable.
- Smart contracts
The blockchain no longer requires a trusted third party
As mentioned above, the blockchain no longer requires a trusted third party. The management of these chains of intermediaries requires many successive administrative procedures that cost companies time and money.
Smart contract involvement?
The various actors in the supply chain will have to be able to agree on the terms of the contracts governing their activities, transcribe them in an IT way in the form of autonomous “smart contracts” allowing them to have a clear understanding of the goods’ chain of ownership.
These smarts contracts will make operations such as ordering, receiving goods or making payments autonomous, while maintaining a clear and universally accepted legal framework.
Blockchain can reduce error and fraud representing a cost of several billion dollars each year
Carriers, for their part, will be kept informed in real time of the completion of each stage of transport in order to prepare the necessary containers as efficiently as possible. The blockchain is therefore used here to secure this data exchange with a tamper-proof registry that can reduce the risk of error and fraud — which represents a cost of several billion dollars each year that will be paid in fine by the consumer.
For example, IBM has developed with Maersk, one of the world’s leading container ship operators, a platform that aims to digitise all stages of the transport chain.
The use of smart contracts therefore guarantees the proper implementation of the supply chain. In concrete terms, a producer of goods who responds to an order will be able to create and complete online all the documents necessary for his transport needs and thus coordinate, among other things, the commercial invoice, the reservation confirmation, the insurance certificate, the receipt for the receipt of freight from the carrier (FCR), the bill of lading, the maritime transport letter and the buyer. All parties to the contract will be able to sign the necessary documents online.
Some smart insurance contracts may be autonomous and allow their automatic implementation by instantly defining the insurance clauses with an insurance policy number, the description and value of the insured property and the insurance details. These digital smart contracts will involve all organisations and intermediaries to be involved in the exchange, including customs and port authorities.
IOT and supply Chain
Forwarder’s Cargo Receipt (FCR) does not confirm the condition of the cargo or its location. The document generally includes the details of the reservation and will indicate that the cargo has been received in apparent good condition. Otherwise it will normally be rejected and a freight forwarder’s cargo receipt will not be issued.
It is at this stage that different IOT (Internet of Things) projects will fulfil their roles. They will allow via different connected sensors to instantly know the location, follow temperature, monitoring shocks via accelerator sensors…
Blockchain will establish the condition of the goods as well as the responsibility of each actor at each stage of the supply chain
If we take the example of goods that have to travel under certain temperature conditions, it is essential from production to receipt of the goods by the final consignee, to know if and when this cold chain has been broken.
Until now, it was very difficult to establish responsibility. Today, temperature measurements could be carried out by connected objects and would be accessible to all stakeholders and therefore establish the condition of the goods as well as the responsibility of each actor at each stage of the supply chain and eventually to automatically activate an insurance if it has been subscribed.
Blockchain technology could simplify or even automate the exchange of information and generate greater trust between the different partners through their accountability, since the shipment of anything is a transfer of ownership sequence that will be stored in an irrefutable and secure manner so that it does not lose track of who is responsible for an asset during each transfer.
This is how the Supply Chain would gain in speed of execution and contribute to the consistency of the quality of products distributed by supermarkets.
Even if it is only in its infancy, all observers agree that the blockchain will play a major role in the coming years. In parallel with the development of connected objects, it will undoubtedly be an essential vector for accelerating the digital transformation of the supply chain, which will be of great benefit to the distribution sector and the end consumer.
Marc Toledo Bit4you
bit4you is an European crypto assets exchange platform.
Facilitating your first step into the world of crypto is our mission.
Providing a complete set of blockchain related integrations, platforms and utilities is our vision.
