The rise of e-commerce has opened the door to many innovations in many industries and companies involved in supply chain logistics are looking at how technology can help them handle the volumes and time expectations of customers.
Maersk IT specialists started tracking containers of avocados and roses from Kenya to the Netherlands in 2014, they found that a labyrinth of paperwork and processes that needed to be navigated*. The navigation of these paths is costly, with Maersk reporting that there are “more than 200 interactions involving more than 30 people” associated with each one-container shipment. The use of blockchain technology is expected to save the industry billions of dollars by improving efficiency,” said Robbert van Trooijen, Chief Executive Officer, Asia Pacific Region, Maersk Line at the TOC Asia, Container Supply Chain Conference in Singapore.
Digital technologies continue to transform industries with shipping and logistics moving towards increased digitisation of many processes. Maersk, after their avocado-and-rose research, has partnered with IBM to provide more transparency in the supply chain using blockchain technology.
The tamper-proof chain of records would offer improved workflow efficiency, real-time tracking and visibility, and reduce fraud. However, for the system of links to work in this chain, each link must be on board – parties involved in the transactions must be able to access the network and willing to upload the information onto it.
Maersk and IBM** plan to launch the system later this year. Companies like Wal-Mart are already testing the waters by piloting the system solution. Industry-wide adoption, however, is likely to take quite some time.
Another company using blockchain to improve supply chain management is Chained Finance, a new supply chain finance platform launched by FnConn, a subsidiary of Foxconn, and Dianrong, a Chinese lending marketplace. The platform makes out loans to manufacturers using blockchain technology.
The loans are typically made out to small companies from the supply chain, allowing them funding to pay workers while waiting for invoice payments to come through preventing disruptions in the supply chain.
The new finance platform is exciting news for two reasons, according to Sergio Rodriguera Jr., Chief Strategy Officer of The Credit Junction***, “The first is large multinationals are increasingly seeing the importance of ensuring their suppliers, especially SME suppliers, have access to capital to fulfil orders and avoid supply chain disruptions. Second, non-bank lenders have stepped in to offer supply chain financing solutions where traditional sources have been unable to help SMEs again, due to the cost of onboarding or serving larger customers.”
Rodriguera also added that it would take a few years for blockchain to prove itself in trade finance, “However, there are many who feel it could be beneficial in trade finance and supply chain. You are seeing this with the IBM and Maersk deal, as well as Project Manifest powered by Microsoft.”
Project Manifest uses blockchain for product tracking that could one day help to ensure the origin of materials and labour used in the manufacturing of goods.