Utilizing the inherent irrefutability within blockchain technologies, great strides can be made in reducing the risk of counterfeits and actually saving lives.
Given today’s supply chains combine a diverse set of stakeholders with varying interests, and many third-party intermediaries, blockchain can be a useful technology for the logistics sectors.
Blockchain is a type of database system that maintains, records and authenticates data and transactions. In supply chains, products are assigned unique identifiers that allow their entire history to be captured as it moves to the end customer. Stakeholders validate this information in real time and if anyone tries to tamper with, alter or erase a record, everyone will know.
According to the International Data Corporation (IDC), global spending on blockchain solutions is forecast to reach US$2.1 billion in 2018, more than double the $945 million spent in 2017. In 2021 annual spending is expected to reach US$9.7 billion.
“The experiments with blockchain in finance are well known, but we believe logistics is an area where the new technology will have a truly profound impact,” insists Matthias Heutger, senior vice president DHL Customer Solutions & Innovation.
A new study from DHL and Accenture highlight the ability of the technology to Blockchain technology shows great promise for dramatically improving the efficiency and reliability of supply chains in all industries.
In particular, they look at the pharmaceutical industry. As many as one million lives are lost each year due to counterfeit medications, according to Interpol, and it is estimated that up to 30% of pharmaceutical products sold in emerging markets are counterfeit.
“We see especially exciting potential for blockchain in pharmaceuticals, which is why we focused our proof of concept with Accenture on the life sciences and healthcare industry,” says Keith Turner, CIO Chief Development Office, DHL Supply Chain. “By utilizing the inherent irrefutability within blockchain technologies, we can make great strides in highlighting tampering, reducing the risk of counterfeits and actually saving lives.”
DHL and Accenture created a blockchain-based serialization prototype with nodes in six geographies to track pharmaceuticals across the supply chain. The ledger tracking these medicines may be shared with stakeholders, including manufacturers, warehouses, distributors, pharmacies, hospitals, and doctors. Lab-simulations show how blockchain could handle more than seven billion unique serial numbers and 1,500 transactions per second.
“Using a common, indelible and secure ledger, the industry can achieve much higher safety standards – from the factory to the patient – at much lower cost. This is one of several opportunities blockchain affords to restructure business processes while reducing cost and complexity.” said Andreas Baier, Accenture lead for the travel and transportation industry and DHL client team leader
DHL and Accenture’s pharmaceutical prototype is just one of the use cases highlighted in their trend report. Blockchain could also be used for asset management, to improve transparency and traceability, and to automate commercial processes with “smart contracts,” which facilitate and verify the performance of contracts without third parties.
The potential for blockchain in logistics is significant. However, moving from concepts and pilot applications to actually deploying viable solutions will require the technology to be further developed, organizational transformation and a willingness to collaborate between all stakeholders. Success depends on all parties working together to transform legacy processes and to jointly adopt new ways of creating logistics value.