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The logistics industry needs to be ready for blockchain. Here’s why

Blockchain first gained recognition as the technology behind Bitcoin, but it has since been used to increase transparency and efficiency across various industries.
27 February 2019 •

In logistics, blockchain is touted to improve traceability within supply chains and bring about automation in commercial processes, where 'smart contracts' will speed up payments and reduce invoicing errors.

The promised potential has fueled business interest and investment, with US$2.1 billion (€1.85 billion) spent on blockchain solutions in 2018. This figure is projected to climb on a compound annual growth rate of 81.2 percent to reach US$9.7 billion in 2021, according to IDC.

The research firm also expects blockchain spending to see robust growth in Asia-Pacific, climbing an average 90.7 percent through to 2021. In addition, IDC forecasts that 25 percent of Global A1000 companies will use blockchain services to facilitate digital trust and, by 2020, 40 percent of supply chains will use blockchain networks in production, alongside 25 percent of banks and 20 percent of healthcare organizations.

So, what exactly does blockchain promise to fix and, in particular, why should the logistics industry care? The key focus here is trust.

Addressing the need for trust, transparency & efficiencies

For decades, business dealings and transactions have depended on the principle of mutual trust on the part of all parties connected in the supply chain or ecosystem. However, as supply chains grow and become increasingly global, more stakeholders and processes are involved and business agreements have become tediously complex to manage and monitor.

This is where blockchain comes in.

Defined as a distributed ledger infrastructure, it securely records transactions between parties by essentially “sharing” databases between multiple parties involved in a supply chain. It eliminates the need for intermediaries to act as trusted third-parties to verify, record, and coordinate transactions.

Sensitive data can be shared securely, enabling higher levels of transparency across supply chains and allowing consumers to make more informed choices about the products they purchase.

Blockchain can also increase efficiencies by significantly reducing the need for red tape and paperwork. A complex paper trail, for instance, involving multiple parties can be substituted with an automated process in which information is stored, securely, in a digital format.

Cargo movements can also be tracked via blockchain in real time.

It can be used to trace the life cycle of a product or shipment as it makes its way across the supply chain — transferring from the manufacturer to logistics operator, to the wholesaler and retailer, and eventually the consumer.

Furthermore, the use of smart contracts can replace manual processes typically laid out in lengthy legal contracts. Powered by blockchain, smart contracts are able to automatically enforce pre-established rules and processes while ensuring the terms are fulfilled by all parties involved.

Blockchain in action

Looking to tap such benefits of blockchain, Pacific International Lines, PSA International, and IBM have agreed to jointly develop products and services based on the technology. The goal was to drive faster approval and improve efficiencies, security, and transparency within the region's supply chain networks.

The partnership resulted in a proof-of-concept designed to track real-time cargo movements between Chongqing, China, and Singapore via the Southern Transport Corridor.

Built on the IBM Blockchain Platform, the application was put through a trial that successfully led to the transparent and trustworthy execution of multimodal logistics capacity booking. It also facilitated permission-based access control for participants in the supply chain as well as executions based on regulatory compliance.

DHL, too, has been actively assessing and exploring potential use cases of blockchain technology. DHL partnered consulting firm Accenture to build a working prototype that tracks pharmaceuticals, with the aim to prevent tampering and errors as they make their way from the point of origin to consumers.

By tapping the inherent irrefutability of the technology, DHL hopes to leverage blockchain to reduce the risk of counterfeits and save lives.

Pang Mei Yee, Vice President, Head of Innovation, Asia Pacific, Customer Solutions & Innovation, said: "We believe logistics is an area where blockchain can have a truly profound impact, though further development is required to address concerns on sustainability and environmental impact.

"In the near future, blockchain use cases would likely focus more on improving efficiency and existing processes, by leveraging it for enhancing transparency and collaboration in supply chains.”

Whether it can bring about positive change for companies will depend on how ready they are to embrace blockchain. The technology is poised to disrupt business practices and models, and replace legacy processes to create new logistics value.

 

This article was first published on e27.

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In logistics, blockchain is touted to improve traceability within supply chains and bring about automation in commercial processes, where ‘smart contracts’ will speed up payments and reduce invoicing errors.

The promised potential has fueled business interest and investment, with US$2.1 billion (€1.85 billion) spent on blockchain solutions in 2018. This figure is projected to climb on a compound annual growth rate of 81.2 percent to reach US$9.7 billion in 2021, according to IDC.

The research firm also expects blockchain spending to see robust growth in Asia-Pacific, climbing an average 90.7 percent through to 2021. In addition, IDC forecasts that 25 percent of Global A1000 companies will use blockchain services to facilitate digital trust and, by 2020, 40 percent of supply chains will use blockchain networks in production, alongside 25 percent of banks and 20 percent of healthcare organizations.

So, what exactly does blockchain promise to fix and, in particular, why should the logistics industry care? The key focus here is trust.

Addressing the need for trust, transparency & efficiencies

For decades, business dealings and transactions have depended on the principle of mutual trust on the part of all parties connected in the supply chain or ecosystem. However, as supply chains grow and become increasingly global, more stakeholders and processes are involved and business agreements have become tediously complex to manage and monitor.

This is where blockchain comes in.

Defined as a distributed ledger infrastructure, it securely records transactions between parties by essentially “sharing” databases between multiple parties involved in a supply chain. It eliminates the need for intermediaries to act as trusted third-parties to verify, record, and coordinate transactions.

Sensitive data can be shared securely, enabling higher levels of transparency across supply chains and allowing consumers to make more informed choices about the products they purchase.

Blockchain can also increase efficiencies by significantly reducing the need for red tape and paperwork. A complex paper trail, for instance, involving multiple parties can be substituted with an automated process in which information is stored, securely, in a digital format.

Cargo movements can also be tracked via blockchain in real time.

It can be used to trace the life cycle of a product or shipment as it makes its way across the supply chain — transferring from the manufacturer to logistics operator, to the wholesaler and retailer, and eventually the consumer.

Furthermore, the use of smart contracts can replace manual processes typically laid out in lengthy legal contracts. Powered by blockchain, smart contracts are able to automatically enforce pre-established rules and processes while ensuring the terms are fulfilled by all parties involved.

Blockchain in action

Looking to tap such benefits of blockchain, Pacific International Lines, PSA International, and IBM have agreed to jointly develop products and services based on the technology. The goal was to drive faster approval and improve efficiencies, security, and transparency within the region’s supply chain networks.

The partnership resulted in a proof-of-concept designed to track real-time cargo movements between Chongqing, China, and Singapore via the Southern Transport Corridor.

Built on the IBM Blockchain Platform, the application was put through a trial that successfully led to the transparent and trustworthy execution of multimodal logistics capacity booking. It also facilitated permission-based access control for participants in the supply chain as well as executions based on regulatory compliance.

DHL, too, has been actively assessing and exploring potential use cases of blockchain technology. DHL partnered consulting firm Accenture to build a working prototype that tracks pharmaceuticals, with the aim to prevent tampering and errors as they make their way from the point of origin to consumers.

By tapping the inherent irrefutability of the technology, DHL hopes to leverage blockchain to reduce the risk of counterfeits and save lives.

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In parcel hubs around the world, employees are often required to perform a dangerous, inefficient task — manually combing through sort carriages that make up the conveyor belt system, some up to seven meters above ground level.

Every hour, 12,000 shipments are whisked along a 210m conveyor belt at the DHL Express South Asia Hub, where they are sorted and sent on their way. Smaller parcels occasionally fall through gaps and could take up to six hours to find.

“We weren’t locating parcels in a safe and efficient manner whenever we received an enquiry about failed deliveries,” said Kelvin Lee, Engineering Manager, South Asia Hub, DHL Express Singapore. “The long duration of the manual searches, which had to take place during non-operating hours, also meant further delays.”

This problem spurred the DHL Express South Asia Hub team to develop the Sorter Search System (SSS). The creation won them the “Most Innovative Employee Team” title at the annual DHL Asia Pacific Innovation Awards — held as part of India Innovation Day — in Mumbai, India, on 4 September 2018.

The team behind the Sorter Search System (from left to right): Kelvin Lee, Engineering Manager; Soong Keng Hing, Engineer; and Edilberto Garcia Sahagun, Technical Services Manager.

Finding alternative uses of existing technology

The SSS dramatically reduces the time spent on unnecessary manual ground work almost entirely. It comprises a relatively inexpensive S$200 (€128) off-the-shelf action camera that is mounted onto a carrier and sent through the route that packages take twice a day, videoing the belt and surrounding environment as it goes.

Within just five to six minutes, it completes its task, and it takes just an extra 10 minutes and one person to examine the footage to locate wayward flyers — even before delays occur.

Innovation is not just about building or chasing down the latest or best technologies. As Samuel Lee, General Manager, South Asia Hub, DHL Express Singapore, aptly puts it: “It’s about using the right technology to improve the customer experience and our working conditions.”

With the right application, existing technologies when used creatively in an alternative way, also have the ability to achieve desirable results.

“Rather than leveraging new technology, using existing technology and making the solution a lot cheaper is also innovation itself. The cost equation is an important one, especially for businesses that have very small profit margins,” said Pang Mei Yee, Vice President, Head of Innovation, Asia Pacific, Customer Solutions & Innovation.

The possibility of tapping on current technology to solve common challenges should not be ignored. Instead, it should serve as a stepping stone to kick-start the innovation journey. “You need to fail, you need to experiment. You need to start small and be agile. That’s innovation,” Pang added.

Understanding the problem

Before embarking on the innovation process, it is also imperative to grasp the need or the problem faced by people involved in a company’s day-to-day operations. This would allow tailoring of a practical, effective solution that specifically solves a problem.

Collaborations of this nature stand a higher chance of yielding positive results and improvements. Working with automobile giant BMW Brilliance — the joint venture for BMW passenger cars in mainland China, the DHL Supply Chain (DSC) China team did exactly that by developing an innovation package of five tools to improve cost and operational efficiency.

The package, which bagged the team the “Most Innovative Customer Solution” award, comprises: a bin type allocation tool to simulate stacking patterns, a smart field management software that provides real-time order status updates, a ring scanner and storage location optimization tool, and a tool which splits workload by warehouse zone both physically and in the system.

Gang Su, Area Operations General Manager, Auto Sector Aftersales Logistics, DHL Supply Chain China, said: “China is an extremely competitive market, and our focus is always continuous improvement. The fully customized set of innovations was developed to improve operations. With the iteration and trial of every tool, the customer saw the benefit and pushed us to develop them further.”

Its success has also given rise to the possibility for similar innovation packages — featuring both hardware and software solutions — to be developed for other automotive customers.

Collaborating with the right technology partner

Even the best of ideas will fall flat without the right emphasis on the technology powering the solution and also, proper execution. Searching for the right technology partner to complement a solution can be an arduous process. Luckily for the DSC China IT team, they found not one, but two ideal technology partners.

Partnering Hyco, the team created a wearable ring scanner solution for warehouse operations. The solution allows for hands-free picking, while also replacing paper-based processes and traditional radio frequency (RF) guns.

Through another partnership with Huawei Technologies, the team also launched a smart yard and dock management solution that leverages on Narrow Band (NB)-IoT sensor technology to visualize and automate both the inbound and unloading logistic processes. An improvement of almost 30 percent in unloading process and on-time delivery was observed throughout the year-long pilot.

But what makes a partner the right fit?

“It’s more than the technology or the financial advantage they can offer, it is also the willingness to listen to the needs of our customers and the flexibility to tweak their technology in a way that best fits the specific challenges,” said Pang.

Innovation at the core of progress

The strong competition in the logistics industry drives all businesses to continuously innovate and come up with new solutions that improve productivity and efficiency of current processes — or risk being left behind.

Tamanna Dahiya, Director at DHL Asia Pacific Innovation Center speaks at India Innovation Day 2018.

“In today’s environment, I don’t think any company can afford to just rest on the products and solutions and the kind of market leader position it may have,” said Tamanna Dahiya, Director of the DHL Asia Pacific Innovation Center. “Unless you keep up with the changing technologies and innovate, you could lose those positions very quickly.”

The late Steve Jobs once said: “Innovation distinguishes between a leader and a follower.” And this applies to all industries, including logistics. When put into practice, innovation is not only essential for survival; it is also an opportunity for a business to stay ahead of the competition.

[post_title] => Putting innovation into practice [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => putting-innovation-into-practice [to_ping] => [pinged] => [post_modified] => 2022-09-28 00:28:59 [post_modified_gmt] => 2022-09-27 16:28:59 [post_content_filtered] =>

Every hour, 12,000 shipments are whisked along a 210m conveyor belt at the DHL Express South Asia Hub, where they are sorted and sent on their way. Smaller parcels occasionally fall through gaps and could take up to six hours to find.

“We weren’t locating parcels in a safe and efficient manner whenever we received an enquiry about failed deliveries,” said Kelvin Lee, Engineering Manager, South Asia Hub, DHL Express Singapore. “The long duration of the manual searches, which had to take place during non-operating hours, also meant further delays.”

This problem spurred the DHL Express South Asia Hub team to develop the Sorter Search System (SSS). The creation won them the “Most Innovative Employee Team” title at the annual DHL Asia Pacific Innovation Awards — held as part of India Innovation Day — in Mumbai, India, on 4 September 2018.

The team behind the Sorter Search System (from left to right): Kelvin Lee, Engineering Manager; Soong Keng Hing, Engineer; and Edilberto Garcia Sahagun, Technical Services Manager.

Finding alternative uses of existing technology

The SSS dramatically reduces the time spent on unnecessary manual ground work almost entirely. It comprises a relatively inexpensive S$200 (€128) off-the-shelf action camera that is mounted onto a carrier and sent through the route that packages take twice a day, videoing the belt and surrounding environment as it goes.

Within just five to six minutes, it completes its task, and it takes just an extra 10 minutes and one person to examine the footage to locate wayward flyers — even before delays occur.

Innovation is not just about building or chasing down the latest or best technologies. As Samuel Lee, General Manager, South Asia Hub, DHL Express Singapore, aptly puts it: “It’s about using the right technology to improve the customer experience and our working conditions.”

With the right application, existing technologies when used creatively in an alternative way, also have the ability to achieve desirable results.

“Rather than leveraging new technology, using existing technology and making the solution a lot cheaper is also innovation itself. The cost equation is an important one, especially for businesses that have very small profit margins,” said Pang Mei Yee, Vice President, Head of Innovation, Asia Pacific, Customer Solutions & Innovation.

The possibility of tapping on current technology to solve common challenges should not be ignored. Instead, it should serve as a stepping stone to kick-start the innovation journey. “You need to fail, you need to experiment. You need to start small and be agile. That’s innovation,” Pang added.

Understanding the problem

Before embarking on the innovation process, it is also imperative to grasp the need or the problem faced by people involved in a company’s day-to-day operations. This would allow tailoring of a practical, effective solution that specifically solves a problem.

Collaborations of this nature stand a higher chance of yielding positive results and improvements. Working with automobile giant BMW Brilliance — the joint venture for BMW passenger cars in mainland China, the DHL Supply Chain (DSC) China team did exactly that by developing an innovation package of five tools to improve cost and operational efficiency.

The package, which bagged the team the “Most Innovative Customer Solution” award, comprises: a bin type allocation tool to simulate stacking patterns, a smart field management software that provides real-time order status updates, a ring scanner and storage location optimization tool, and a tool which splits workload by warehouse zone both physically and in the system.

Gang Su, Area Operations General Manager, Auto Sector Aftersales Logistics, DHL Supply Chain China, said: “China is an extremely competitive market, and our focus is always continuous improvement. The fully customized set of innovations was developed to improve operations. With the iteration and trial of every tool, the customer saw the benefit and pushed us to develop them further.”

Its success has also given rise to the possibility for similar innovation packages — featuring both hardware and software solutions — to be developed for other automotive customers.

Collaborating with the right technology partner

Even the best of ideas will fall flat without the right emphasis on the technology powering the solution and also, proper execution. Searching for the right technology partner to complement a solution can be an arduous process. Luckily for the DSC China IT team, they found not one, but two ideal technology partners.

Partnering Hyco, the team created a wearable ring scanner solution for warehouse operations. The solution allows for hands-free picking, while also replacing paper-based processes and traditional radio frequency (RF) guns.

Through another partnership with Huawei Technologies, the team also launched a smart yard and dock management solution that leverages on Narrow Band (NB)-IoT sensor technology to visualize and automate both the inbound and unloading logistic processes. An improvement of almost 30 percent in unloading process and on-time delivery was observed throughout the year-long pilot.

But what makes a partner the right fit?

“It’s more than the technology or the financial advantage they can offer, it is also the willingness to listen to the needs of our customers and the flexibility to tweak their technology in a way that best fits the specific challenges,” said Pang.

Innovation at the core of progress

The strong competition in the logistics industry drives all businesses to continuously innovate and come up with new solutions that improve productivity and efficiency of current processes — or risk being left behind.

Tamanna Dahiya, Director at DHL Asia Pacific Innovation Center speaks at India Innovation Day 2018.

“In today’s environment, I don’t think any company can afford to just rest on the products and solutions and the kind of market leader position it may have,” said Tamanna Dahiya, Director of the DHL Asia Pacific Innovation Center. “Unless you keep up with the changing technologies and innovate, you could lose those positions very quickly.”

The late Steve Jobs once said: “Innovation distinguishes between a leader and a follower.” And this applies to all industries, including logistics. When put into practice, innovation is not only essential for survival; it is also an opportunity for a business to stay ahead of the competition.

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Pang Mei Yee, Vice President, Head of Innovation, Asia Pacific, Customer Solutions & Innovation, said: “We believe logistics is an area where blockchain can have a truly profound impact, though further development is required to address concerns on sustainability and environmental impact.

“In the near future, blockchain use cases would likely focus more on improving efficiency and existing processes, by leveraging it for enhancing transparency and collaboration in supply chains.”

Whether it can bring about positive change for companies will depend on how ready they are to embrace blockchain. The technology is poised to disrupt business practices and models, and replace legacy processes to create new logistics value.

 

This article was first published on e27.

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