Digitization promises to level the supply chain playing field

Digital supply chain


there is one segment of global freight movement that fosters distrust, it is
the supply chain. Goods move around the world, change hands multiple times, sit
unattended for long stretches, and ultimately show up in a warehouse or on a
store shelf. Few know how they got there, and most don’t care.

But all the intermediaries
responsible for ensuring that good reached that shelf do care. They care that
the product is in good condition; they care that it arrived on time; and they
care that it arrived in the least costly way possible so as to maximize the
profit margin. Slip up in any one of these steps, and someone doesn’t get paid.

The result: lack of confidence in
the system. Take the example of the trucker who picks up product and makes the
delivery on time, only to find out the load was damaged during loading. It’s
not the driver’s fault, but the receiver wants to hold someone responsible, so
damage costs come out of the driver’s pay. Can that driver go back to the
shipper and demand the lost payment? Maybe, but the time and expense of doing
so will likely cost more than the lost payment is worth.

It is exactly these types of
scenarios that blockchain backers believe the technology is destined to solve.
According to the Institute for the Future, “A blockchain is an online database that stores information
across a network of personal computers, making it not just decentralized, but
distributed. This means no central company or person owns the database, yet everyone
in the network can use and help run it, but not tamper with it.”

At the Blockchain in Transport Alliance (BiTA) Spring Symposium in Atlanta, Agoric CEO Dean Tribble explained how the immutable
aspects of blockchain technology underpin smart contracts and build that trust.

“Blockchains provide high integrity
to data and choices,” Tribble said. “A smart contract reduces the cost of
creating arrangements with people that you can rely on. That’s the
game-changer; that’s one of the reasons why people are so deeply excited about

A key element of a blockchain is
that it requires a cryptographically created key. Without the key, the
information is hidden. The key may be nothing more than a login screen, but it
helps provide the security that ensures the blockchain is a true representation
of the transaction it represents. In the supply chain, that is the movement of

One of the special features of a
blockchain is that everyone included in the chain has access to all the data in
the chain — complete transparency — but can only alter their part of the chain.
Basically, blockchain is a record-keeping tool, and the supply chain is all
about record keeping.

Within the supply chain, the
movement of a single box can generate hundreds of documents and thousands of
data points. Customs paperwork, bills of lading, vehicle GPS data and even
available driving hours for truck drivers are just a few of the possible data
points. The digitization of these data points, and the use of blockchain to
verify them, is the here and now.

In the journey of a shipment, what
happens if a driver shows up late? Typically, there may be some kind of
financial penalty, but what if the contract stipulated penalties are not to be
assessed for situations beyond the driver’s control, such as weather or
detention at the pickup facility? Without the ability to document and verify
those circumstances, it becomes the driver’s word against the receiver’s, and
drivers rarely win that argument. A blockchain-based digital record, though,
would record all that data, including GPS location, and verify that the truck
spent more time at a facility due to slow loading. It could also pull in weather
data and “lock” that information into the digital record, showing that the
driver had to slow down or even stop due to a snowstorm.

That is the hope that blockchain
and digitization provide for the supply chain. It is the ability to document,
verify and record data points that prove a single point of truth and eliminate
the he-said, she-said aspect of transactions.

FreightTrust is one company that has taken the digitization of the supply
chain to new levels. The company offers a complete cloud-based electronic data
interchange (EDI) and paperless document platform for shippers, carriers,
brokers and other third parties.

The digitization means finance and
factoring can be integrated, allowing for real-time insight into the finances
of any job and shipment details. Integrated real-time GPS tracking and instant
quoting and carrier availability streamline costs. Additionally, parties sign
documents electronically and automate customs paperwork and even duties

The current supply chain is siloed
and burdened by trust issues. Trucking and the supply chain may be about
relationships, but they are relationships built on a hill, one rainstorm away
from crumbling. Blockchain and the digitization of the supply chain promise to
transform the status quo.

“Digitization will change that,
bringing down walls and creating a completely integrated ecosystem that is
fully transparent to all the players involved,” according to an article in the
Harvard Business Review. “This ecosystem will depend on several key digital
technologies — including logistics platforms, analytics, robots, and even 3D
printing. Those who move quickly to digitize their supply chain will gain
efficiencies, develop new business models and revenue streams, and create
competitive advantage.”