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Blockchain in logistics

Thursday, 11 April 2019

Blockchain technology seems to be popping up everywhere lately, offering solutions in nearly every sector imaginable. But how does this innovative technology actually work and why is it so interesting to the world of logistics?

In a blockchain, every transaction (or ‘block’) is saved digitally. Every block contains a code, that is passed through to the next block in the chain. Each block holds its own code, that of the previous block in the chain and the transaction details. Every time a block is being altered, it receives a different code and the following blocks become invalid. This makes it nearly impossible to fraud.  

Positive impact on logistics

Many different sectors, including logistics, have a lot to gain from the use of blockchain technology. Valuable information about payments, shipping and inventory management can all be encrypted and saved. This way paperwork is reduced to an absolute minimum. Blockchain means more transparency, more efficiency and more control in the supply chain, making extra phone calls and emails unnecessary.

One of the many companies that started using blockchain recently to make transports more efficient, is The Netherlands’ largest supermarket chain Albert Heijn. “We replaced the paperwork that required stamps, signatures or people moving from one place to another by blockchain technology”, says Mark van der Drift, CEO of Albert Heijn’s logistics partner Cornelissen. Taking paper out of the logistic process can mean saving millions of euros, since it allows suppliers to cut their average driving time by 20 minutes per ride.

A non-stop evolution

So, is blockchain becoming an indispensable element in the world of logistics? Not quite, to be honest, since many organisations don’t consider internet security a priority and tend to wait and see what happens. On the other hand, we are seeing companies that are so sensitive to the hype that is being created around blockchain, that they rush into the implementation of the technology without thinking things through.

Companies that want to be ready for blockchain, need to meet certain important criteria. Surely, every CEO wants to improve the productivity of his organization in the chain. But that means you have to be prepared to give up a part of your autonomy. The most important rule for companies is that they must be willing to trust this new technology and give each other (partial) access to their systems. This is something not everyone understands - at least not yet.