Harnessing Blockchain in the SCM & Logistics Space

The world is changing, technology evolving and business operations experiencing radical transformation. Blockchain technology and IoT are two of the newest technologies bringing about this transformation in different industries and it is safe to say that the transformation is just beginning. Blockchain technology and IoT continue to converge and as this happens the number of commercialized applications harnessing these technologies continues to grow. Various industries have already adopted blockchain technology the most recent industry to adopt this technology being the transportation and logistics industry. Just to mention, this is the industry that makes supply chains work. In their absence, supply chains would be crippled.

Sometime in August last year, a company called Blockchain in Trucking Alliance (BITA) was launched having about 150 or so member organizations including sippers, technology vendors, carriers, and management companies. The goal of this company is creating standards and educating industry stakeholders on the merits and the promise of the blockchain technology. According to the co-founder of BITA, who also happens to be the CEO of TransRisk, the merge between blockchain and IoT technologies will be formidable. Thus every industry stakeholder focused on bringing about undeniable transformation in operations ought to educate themselves about and harness these technologies.

Blockchain has grown in popularity owing to its characteristic features such as immutability, incorruptible and the capability to enable absolute transactional transparency. It is no doubt that blockchain has the power to transform every aspect of the logistics and supply chain industry. Currently, developments are underway to ensure that blockchain systems will be able to work in tandem with data drawn from IoT devices used in logistics and supply chain. The current daunting task of monitoring shipment of freight transactions will be automated and eased by the use of blockchain based smart contracts. The smart contracts operate on the ‘if-then’ premise effectively controlling the delivery of assets and cash to the relevant parties.

Blockchain technology has its merits and demerits alike some of which are outlined below.


  • Simplification of the settlement of claims. Smart contracts will be very instrumental in making this possible.
  • Increasing transactions security, accelerating payments and reducing fraud. Blockchain prides itself in advancing absolute transparency and accountability.
  • Reducing the costs of compliance and regulatory requirements.
  • Eliminating intermediaries thereby cutting costs, shortening the supply chain and reducing paperwork.
  • Improving traceability of items throughout the supply chain.

Challenges of blockchain to the logistics and supply chain sector

  • The absence of a central authority to mitigate risk. The blockchain technology is completely decentralized leaving no room for centralized operations.
  • Lack of prior knowledge and expertise about the technology. This technology has not been tested on any large scale before thus one cannot be completely sure about its effectiveness.
  • Limitation in accessing available cryptocurrencies easily. If fiat currency were to be used, the promise of blockchain could be compromised.
  • Virtually every industry has logistics and supply chain requirements including the pharmaceutical and automobile industry. Considering this, the adopting of the blockchain technology by the logistics and supply chain sector will benefit this sector and those that outsource these services. Still, individual companies can opt to harness blockchain technology in their supply chain and avoid outsourcing.

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