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If Blockchain can store all the Logistics' contracts...

Short-term benefits -

  1. Carriers won't need to send their rate cards to every new customer/3PL that they start doing business with. They could simply ask their potential customers to look up the rate cards in the Blockchain. Cost of service offered to similar customers with similar SKUs would give one an indicative price point to start a negotiation
  2. Proof of Concept is readily available for customers coming onboard and for new carriers interested in exploring the Blockchain
  3. AP and AR can be managed in the Blockchain where the payments could be made in a secured fashion riding atop the Blockchain's native framework
  4. Payments could be tied to milestone events such as proof of pickup and proof of delivery. This can help maintaining an audit trail and working out a ranking system to reward the carriers that have consistently Delivered-In-Full-On-Time
  5. All the periodic changes such as the fuel surcharge updates could be applied by the Blockchain service provider thereby eliminating the need for individual carriers to respond to these changes
  6. Blockchain can serve as the single source of truth to run statistical analysis such as the rate of change in the cost of a service between different carriers
  7. Carriers don't need to invest extensively in IT. There won't be a need to integrate multiple enterprise applications. Transportation management systems would only optimize shipment planning. Execution of the shipments -  receiving events for pickup/delivery, etc, -  can be tracked in the Blockchain so the data is visible to all the stakeholders. Moreover, it simplifies data aggregation with all the source systems having to send data to the Blockchain alone.

Long-term benefits -  

  1. Blockchain would lower the entry barrier to the Logistics market. Smaller players who would have been hitherto tending to specific needs of few select customers would start uploading their rates onto the Blockchain
  2. In-house logistics of discrete manufacturing units would show interest. Why not upload their rates onto the Blockchain to offer LTL services to fill the leftover space in their trucks?
  3. Established carriers would have to confront the erosion of revenues. To combat this trend, carriers would tend to negotiate lane-based commitments with their customers. Alternatively, carriers could offer value-added services such as labelling, packaging, etc.
  4. Dynamic alliances - the original carrier would outsource its shipments to secondary carriers on certain lanes in exchange for favorable lanes with ample consolidation opportunities
  5. 3PLs could mutate and fragment their services to upload the rates of warehouse infrastructure, value-adds, and transportation services separately on the Blockchain

Who would offer and maintain the Blockchain service though? Product companies like Oracle could offer Logistics Blockchain in a SaaS based model. As to supervising the contracts between multiple carriers and working out specific needs of clients, consulting partners like Infosys could do that.

Meet our experts at the Modern Supply Chain Experience 2018, January 29-31, 2018

- Kranthi Askani


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