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Blockchain in supply chain management: streamline logistics with DHL

February 20, 2024 8 Mins Read

Businesses today are required to be agile, flexible and efficient to survive in competitive industries and secure an advantage against competitors. In a highly dynamic market, one way companies can distinguish themselves and streamline operational costs is through driving logistics and supply chain management processes with continuous innovation.

The supply chain industry is no stranger to artificial intelligence as they take over tasks such as quality control, monitoring manufacturing products and even managing and influencing maintenance. Moreover, according to the Brookings Institution, more than 1.9 million robots have already been used by businesses to increase efficiency and reduce costs in warehouses and manufacturing factories globally.

New technologies are also emerging, with the blockchain industry being at the forefront of this charge for the past half-decade. GlobalData reports that venture capital (VC) has invested at least US$14.8 billion into blockchains in 2021, and many global companies are seen building their businesses around technologies and focusing on Internet Technology (IT) solutions. The reach of the blockchain industry is massive, with entire developments such as blockchain in transportation and blockchain in shipping underway. These are set to transform the way supply chains operate and determine how business processes run in terms of efficiency and speed.

Among other crypto networks, blockchain has emerged to be a potential game changer in not just the financial world, but that of logistics as well. Some areas where high potential lies in this regard include greatly enhancing supply chain management to improve the coordination between parties, enabling faster delivery of products, increasing products’ traceability, and minimising shipping costs altogether.

But what exactly is blockchain’s relevance in supply chain management and how can you use it to your business’ advantage?

What is blockchain technology?

Blockchain is a public ledger that integrates all types of information — that of supply chain management and logistics included — to be distributed and decentralised across multiple digital networks, computer systems and databases. With its encrypted nature, blockchain technology stores a limitless amount of information and documentation within its system while providing a significant level of security to businesses as compared to traditional banking models dominantly used in the past.

With instant transmissions made via the Internet, blockchain also increases efficiency for businesses by providing immediate, shared and transparent information within permissioned parties. Businesses are thus better able to access an overhead view of all details of their processes end-to-end. A blockchain network can also aid businesses in tracking orders, transactions, accounts and more, such that organisations not only streamline logistics, supply chain management and other operational processes, but also make more accurate decisions when determining tasks and allocating costs.

What are the key features of a blockchain?

In order to adeptly apply blockchain technology in supply chain management, businesses should learn to utilise its key features. They are:

Distributed ledger technology: All parties with the network are granted permission and will have access to the distributed ledger. In contrast to a traditional centralised database, a distributed ledger increases transparency and accountability like never before.
Immutable records: After a transaction has been recorded into the ledger, that too only once, parties are not allowed to alter or tamper with it. However, in the event of a transaction recorded with an error, a new transaction has to be made to correct this mistake, where both are still visible for easy comparison and identification. In the long run, this helps to eliminate the duplication of tasks that can result in costly confusions, allowing for improved data security and reliability.
Smart contracts: A smart contract is a set of rules used to speed up transactions within the ledger. They are stored on the blockchain and the tasks are carried out automatically. For instance, a smart contract can be set up to make AI automatically determine the conditions for different types of transfers and transactions in a business’ supply chain.

The importance of implementing blockchain in Indonesia

Businesses in Indonesia have a lot to gain from implementing blockchain technology, with its various applications across payment processing, digital identity management, asset tracking and auditing, smart contracts, supply chain management, and more.

The decentralised nature of blockchain technology makes it more secure than traditional systems, as there is no central point of vulnerability. This means that data stored on the blockchain cannot be altered or corrupted, helping businesses in Indonesia protect vital information from malicious actors and hackers. Additionally, because all transactions are transparently recorded on the ledger, organisations can gain greater visibility into operations, allowing them to make more informed decisions and improve efficiency.

Blockchain technology can also help businesses in Indonesia reduce costs associated with data storage and reconciliation, as the transparent ledger system eliminates the need for manual record-keeping and verification processes. Furthermore, it enables organisations to streamline their payment processing systems, which can result in faster speeds and lower transaction costs.

Overall, the implementation of blockchain technology can provide businesses in Indonesia with massive benefits, including improved security, transparency, cost-effectiveness, efficiency, and scalability, especially when applied to business logistics. By leveraging blockchain to its fullest potential in supply chain management, Indonesian businesses have the opportunity to gain a significant competitive edge in a rapidly evolving digital economy.

How to apply blockchain technology to supply chains?

Within the supply chain industry, businesses often have to work with several partners as a product goes from one end to the final destination of receiving customers. Thus, it is essential for businesses to mitigate risks within the supply chain through innovative means. Fortunately, with the key features of blockchain technology, businesses are empowered in the following key areas:

1. Grant permissions

To begin, consider the number of parties and who you are working with. You may choose to split your parties based on private blockchains, which can be handled through a corporate firewall whereby only specific parties in your business have access. On the other hand, you can also use a permissioned blockchain to grant permissions and abilities to multiple users outside of your business. You may even choose to add features such as digital thumbprints to further enhance security through encrypted data.

With greater trust between you, your partners, and key employees, you can rest assured that the information your business is receiving remains secure, accurate and timely. Moreover, you will be able to track who receives the information and when, through blockchain records of logistics matters that are only shared within your chosen network.

2. Track information

After determining permissions, you can better track and control the flow of information in supply chains. From here, determine how you want to collect, utilise and disseminate important data. Using blockchain technology, you can streamline your processes in supply chain management to eradicate any step that hinders fast and efficient results.

For instance, you can allow the blockchain to replace manual and traditional processes with automated and digitalised solutions by using a blockchain bill of lading. This is a type of electronic bill frequently used in logistics and shipping, but made unchangeable to allow for total transparency and trust between all parties involved. These are especially useful for international e-commerce businesses where many parties are involved, as transparency helps keep all stakeholders in the logistics process accountable.

3. Review processes

By moving your data to a digital space, you are essentially improving the traceability of your products, processes and all other information being exchanged. Leveraging crypto networks such as blockchain gives you all-time access to real-time information and ease of sharing said information with involved parties within your distributed ledger. In the long run, this helps businesses value-add in logistics management with greater convenience, while reducing high-cost and time-consuming reconciliations or discussions. However, always bear in mind to keep your blockchain aligned to the latest standards. In order to be successful, you must ensure constant reviewing of your processes and keep up with up-to-date market trends.

DHL and Accenture’s leveraging of blockchain technology

Businesses in Indonesia looking to capitalise on blockchain in supply chain management can look to DHL and Accenture’s blockchain-based serialisation prototype and blockchain-based invoicing as a valuable case study.

According to Interpol, each year, almost one million lives are lost as a result of counterfeit medications. Moreover, in emerging markets, at least 30% of pharmaceutical products sold are illegitimate. To overcome this major challenge in the pharmaceutical industry, DHL and Accenture joined hands to push out a blockchain that is now the leading solution for easy verification on the legitimacy of pharmaceutical products. In addition, the blockchain ledger allows pharmacies, hospitals, doctors and even stakeholders such as distributors and partners to track their medicines. In labs, medical specialists are also able to utilise this blockchain and store information while tracking over seven billion serial numbers of medications and 1,500 transactions every second.

The future of DHL and Accenture’s blockchain applications in logistics

Besides aiding stakeholders and consumers to track medical products, DHL and Accenture’s blockchain-based serialisation and invoicing can eventually help businesses streamline logistics processes in terms of cross-trading and back-end works. This includes generating and confirming invoices, bill settlements, auditing of activities, and reporting of information. For such comprehensive capabilities — which can be very costly to implement otherwise — blockchains help reduce costs while providing an advanced and accurate technological solution to inherent problems.

This venture presents itself as a tactical solution in hopes of eradicating prominent challenges faced by businesses inside and outside the pharmaceutical industry. By utilising blockchain technologies, more hospitals and clinics will be able to identify counterfeit products and reduce the risks for consumers, ultimately saving lives. Organisations outside the industry can also utilise the blockchain in different ways to transform operations and improve supply chain management altogether.

How DHL Express can streamline your supply chain

If you’re ready to undertake smart contracts and supply chains powered by our blockchain initiative, let DHL Express help you. Transform your business and foster greater trust among your stakeholders and consumers with our business solutions. In addition, learn to automate your commercial process and equip your business with the right tools to track and monitor your products through transparent, easy and fast solutions. For example, using MyDHL+ can easily allow you to integrate DHL Express functions into existing systems seamlessly.

Shape the future of your business and open a business account with DHL Express today. Feel free to also reach out to our call centres in Indonesia if you have any enquiries on anything logistics.