Blockchain’s Place in the Supply Chain Ecosystem
A group of Penske Logistics associates recently attended the Blockchain Supply Chain Summit in the Schreiber Center at Loyola University in Chicago. This year’s summit attendees included representatives from the business, academic, tech and consulting communities. Penske gave the leadoff presentation at the conference, titled Blockchain Empowered Interoperability: A Single Efficient Tech Ecosystem.
So why Penske, and why blockchain?
Given the continuing growth of spending by shippers in managing their supply chains, investment capital is flowing into tech start-ups and established players seeking to penetrate the space.
Despite the size and sophistication of logistics markets, perceptions exist that there are still many antiquated processes associated with trucking, freight movement and warehousing.
So today’s shippers are barraged by well-intending tech providers, seeking to gain an advantage in aligning the use of their technology with well-known shippers and third-party logistics providers.
As a top 3PL, Penske focuses on bringing its customers – major shippers – technologies that are viable for use in supply chains. Penske separates strong functionality that can make a difference from hype that may be interesting, but tends to be time consuming to wade through. One of these technologies is blockchain.
To be clear, Penske’s interest in blockchain has nothing to do with Bitcoin or other cryptocurrencies. However, blockchain does hold promise as a distributed ledger, as a tool that can work together with the core systems that are the engines driving supply chains, such as: enterprise resource planning, transportation management and warehouse management systems.
While Penske does not expect to replace these applications with a blockchain, connecting the data flows originating in these systems with a blockchain is a realistic next step in their journey with this technology.
Dave Bushee, Penske’s vice president of information technology, explained some of the technical aspects of implementing a blockchain. He described how his team is developing a blockchain with a well-grounded application in the supply chain.
This use case connects an automotive OEM with suppliers of production parts, motor carriers who transport those parts and a freight payment provider engaged in back-end financial settlement of freight transactions. Potential benefits to participants in this private, permissioned blockchain include:
- Traceability of parts
- Visibility of freight status as material moves through the network
- Efficiencies through the use of smart contracts
According to the 2018 Third-Party Logistics Study, among the many areas that garnered interest for blockchain, traceability was one that stood out as more prevalent with shippers and 3PLs. Over 60% of each group recognized blockchain’s upside with its access to a product’s movement history.
Beyond the technical aspects of the blockchain implementation, Penske’s Andy Moses, senior vice president of global products, spoke about how Penske is navigating emerging technology markets and the blockchain project specifically.
“When it comes to emerging technologies, we’re not here picking winners or losers,” said Moses. “We simply stand for our customers.
“Shippers have much to gain from leveraging new technologies, and we are committed to bringing them innovation that drives competitive advantage in their supply chain,” he continued.
Moses stated in conclusion: “Blockchain specifically offers a great deal of promise, while recognizing that there are hurdles for this new technology to overcome, before it reaches levels of adoption in day-to-day use by businesses large and small. Our investment in blockchain recognizes our commitment to learning, developing and implementing innovative solutions for Penske customers.”
By “Move Ahead” Staff
In the event of a food product recall, blockchain would track the recalled item through the process, making it easier to locate and pull it from shelves faster.