In case you hadn’t noticed, I really enjoying writing about supply chain management. It’s a field that I didn’t know existed until I started working, and ever since, I’ve been interested in learning more about how goods move around the world.
Supply chain logistics affect everyone, from the raw material production to the end consumer. A single wrinkle in the chain can be disruptive to industries around the world. But as the industry’s inefficiencies have become an accepted evil, the world has allowed those wrinkles to accumulate.
But what if it didn’t have to be that way? What if we could eliminate the redundancies and errors and unnecessary delays in the process of moving something from point A to point B?
Ironing out those wrinkles and making clients happy with a smooth shipping experience is one of the reasons I came to Rotterdam: to find the perfect logistics company.
Rotterdam is Europe’s largest port, making the metropolitan area a global logistics capital. With over 2000 companies providing service in some form to the industry, it would seem that innovation here is constantly shaping and re-shaping the supply chain world.
That is, in fact, not the case.
Rotterdam has only stepped up its game on the international stage within the past ten years. The city has invested in a variety of projects in order to attract talent and persuade businesses to establish a presence. One such project is Blocklab.
Blocklab wrote a great whitepaper explaining how blockchain can (and will) streamline the logistics industry. It’s thorough but easy to read. In addition to its overview of how blockchain can improve operations and finances, the paper also touches on the environmental impact of making the industry more efficient. (Spoiler alert: it’s a good impact.)
A point that is elegantly touched on is the idea that blockchain may level the playing field for all companies involved:
Careful analysis of successful applications in supply chain management shows that they are based on managing the supply chain as a single entity as a result of one dominant member being able to impose his will on the others. However decentralized supply chains do not have such a dominant member and as a result the potential benefits of supply chain management have so far been much more difficult to realize in these systems. However, using smart contracts in combination with new advanced planning algorithms the (dis)benefits could be fairly distributed among the supply chain members based on actual and immutable transactions.
While any single player may dominate the supply chain process, blockchain will decentralize that power. As a result, SMEs may have a greater opportunity to thrive by emphasizing the value they add to the customer’s experience, rather than the price tag:
Picking up a container, unloading a truck in a CFS, stuffing an export container, sending an invoice to a client, booking an incoming invoice, custom clearance; hardly stuff to get excited about. Your next door competitor does exactly the same and the only way you can differentiate yourself is by being cheaper. The end result: ‘a race to the bottom’. What if we would develop a shared system for all these kind of ‘non-unique selling point’ type of activities? One in which all trust issues are resolved and automated? One in which all processes have been redesigned, made simpler or even totally obliterated? This would significantly lower the transaction costs in and around the port of Rotterdam, making it more competitive – increasing volumes and efficiency and allowing LSPs to compete on value – added, not on price.
This is the kind of talk that gets me excited about supply chain management.
Blocklab’s Blockchain Solutions for Rotterdam
Blocklab has developed solutions for the Port of Rotterdam to increase efficiency through the application of blockchain technology. Its application, however, is easier said than done.
This adoption of Blocklab’s pilot program will shake up all aspects of logistics, from operation to finances to tracking, and everything in between. By implementing blockchain technology, these processes will – ideally – become significantly more efficient and therefore cost effective.
A transaction to move product from point A to point B involves dozens of interactions. According to the Port of Rotterdam’s CFO Paul Smits, a shipment from China to Rotterdam can involve up to 28 parties. With the implementation of blockchain technology, that transaction can move seamlessly through those companies with digital documentation, immediate approval of transactions, and fewer delays.
Previously I have questioned the plausibility of the entire supply chain adopting the technology. If not everyone agrees to be so transparent, how effective can the application of blockchain be?
And taking it a step further: if the platform doesn’t offer an all-in-one solution, how agreeable will businesses be to adopt it?
If, however, the largest port of Europe chooses to implement it, it may be in everyone’s interest to accept blockchain technology as part of their futures. I look forward to seeing how Blocklab’s project with the Port of Rotterdam unfolds.
Change (and growth) is inevitable and often times difficult. I can make it easier for you. Let’s talk about it.