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Could Blockchain Become Part of Supply Chains? What Students in Logistics Training Need to Know

April 18, 2018

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Few predicted the 2017 surge of Bitcoin, the cryptocurrency that grew over 400 per cent in a matter of months. Yet while Bitcoin has fluctuated since then, the technology behind it—namely the blockchain technology that makes Bitcoin secure—has begun to inspire many different industries. A blockchain compiles user transactions into a permanent ledger of data ‘blocks’, which are accessible across a network of designated servers. Users store new transactions as public blocks, but cannot alter the data of any past block in the chain. Capitalizing on the technology’s defining security feature, leading businesses are now integrating blockchain to improve traditional supply chains.

Are you curious to know how blockchain might be the future of supply chains? Read on to find out more.

Blockchain Could Mean Greater Transparency and Lower Costs

Proponents of blockchain cite the transparency of a shared platform, which could allow businesses to track a product on a single network from manufacture to delivery. Companies could assess the speed and quality of their services at each phase of the chain, as each new transaction is immediately made public. Since data blocks are accessible to all ‘permissioned’ transaction parties, blockchain would reduce communication errors and streamline central administration procedures. A permanent transaction record would also guarantee greater security for high-cost assets, discouraging misappropriation and fraud throughout the chain.

Increasing efficiency means cutting costs. Blockchain promises optimal supply chain management, allowing businesses to cut unneeded outsourcing and reduce expenses. Lowering the risk of lost assets would also help companies maintain good industry standing, reassuring stakeholders and attracting new business.

logistics training

Blockchain could be a competitive advantage for businesses cutting supply chain costs

Blockchain Remains to Be Proven as an Industry Standard

While giants like BHP Petroleum and IBM now operate blockchain networks, the technology has not become standard practice for supply chains. Throughout the logistics industry, businesses are still determining the best uses for blockchain—an important consideration for students in supply chain courses. As IBM research shows, blockchain is only necessary when the chain involves multiple entities, including regulators, customers, and suppliers. For business operations on closed networks, a simpler database is likely more effective.

The integration of blockchain also poses important infrastructural challenges. Above all, participating entities need to update data storage capacities to accommodate the technology. Businesses keen to integrate blockchain must think not only of how the transition will affect their operations, but also those of collaborating entities. Since supply chains often run through different countries, the success of blockchain will also vary across the business regulations of national jurisdictions.

Students in Logistics Training Can Look Forward to New Industry Developments

As these questions continue to weigh on industry experts, students in logistics training can look forward to potentially exciting new developments. In addition to BHP and IBM, Oracle and SAP are working closely with their customers to refine blockchain networks. Progress with these pilot programs could shape industry perception of blockchain’s benefits over current supply chain practices.

While the technology is promising, an industry-wide transition might only occur through a ‘critical mass’ effect, once businesses must adopt it to avoid being left out. If a total shift occurs, compatible businesses might even pursue joint opportunities with a blockchain marketplace. However, time will tell just how these potential developments will unfold.

supply chain courses

Blockchain could help businesses of all sizes connect with their customers

Are you interested in supply chain & logistics careers?

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