Trakti Smart "Legal" Contracts Blog

How Blockchain Technologies in Logistics Can Shape the Future

on November 21, 2022

The term “Logistic Operations” is mostly used for the process of moving finished goods, starting from the manufacturer, and moving to the end user. But, even after the delivery of the goods, for returns and guarantees, it is part of the customer journey and satisfaction.
In traditional businesses, companies run their Logistic Operations internally and/or based on human trust or hard copy contracts/documents.
However, Globalization and the hype in e-commerce activities forced companies to partner with Contract Logistics for their expertise, or to innovate their Logistic Operations workflow.
Today, the latest trend is using blockchain technology in Logistics.
But how can blockchain technology in Logistics shape the future?
We will see in a short while!

Logistic Operations and Automation

According to Longman Business Dictionary, Logistics means the arrangements needed for goods, materials, equipment, and people to be in the right place at the right time. Sounds like an art activity, right? In fact, it comes from the word logistike which in Greek means “art of calculating.”
Logistics has a long history from bringing goods to traditional markets on horses to the AGVs (automated guided vehicles) of today, and to the blockchain technology shaping the future of Logistics. As a natural connection, it is also the history of automation. Because people try to increase the efficiency and effectiveness of their activities as time passes and the businesses grow.

However, most companies are not able to optimize their Logistics internally due to a lack of internal expertise or resources. Therefore, they partner with Contract Logistics firms. Today, especially with the trend of e-commerce, the demand for Contract Logistic firms has increased a lot, and their expertise helps companies in many ways from following documents to transportation of the product, beginning from the manufacturer up to the delivery to the customer.
The primary areas of Logistic Operations are:

  • Supplier and Manufacturer Relationship Management
  • Distributed Fulfillment Centers
  • Warehousing
  • Shipping to the End-User

The Logistics Operations can be totally or partially outsourced by 3PL or managed internally. The activities are interconnected, and complex, include multiple stakeholders with vertical and horizontal chains, lots of paperwork, intermediaries and much more.

To deal with these issues, automation is inevitable, and blockchain technology in Logistics changes the future.

It optimizes and automates real-time data and reporting, inventory management and order fulfillment.

According to a McKinsey’s study, many operations could be automated by 2030 but companies are still hesitating to automate their processes for several reasons, including the lack of clarity about which technologies will triumph.

Blockchain is one of the technologies to shape the future in Logistics, but it needs to be understood better to overcome the trust paradox.

How can automation improve Logistics and Transportation?

The ambiguity of modern technologies such as blockchain, the complexity of the planning, and the time needed for the amortization of the costs makes companies insecure about implementing automation. However, process automation is necessary for Logistics (3PL or internalized) and Transportation companies to increase efficiency and scale.
Automation in Logistics and Transportation eliminates the shortage of labor problem, and meets the online retailers’ demand. Speeding up Logistic and Transportation activities while reducing costs and avoiding human error serves also to create long-lasting relationships with suppliers and to have loyal customers. Managing Logistics and Transportation in the optimum way, and tracking & monitoring each activity of goods creates trust between the counterparts and mitigates the risks.
Sounds like a dream, but it is possible to make it come true if you adapt blockchain technology to the future of your Logistics and Transportation activities.

The Role of Smart Legal Contracts Logistics and Trakti

How does blockchain technology change the future of Logistics, you might be asking. The answer is: through the creation of legally binding agreements, so-called Smart Legal Contracts, with the implementation of Smart Contract Programming.
Smart Legal Contracts are the way to use the advantages of blockchain technology in business operations. They are the way to build blockchain-based Logistics and allow companies to:

  • Have secure and punctual payments and business transactions with no intermediaries needed thanks to blockchain’s unanimous nature.
  • Real-time asset tracking and inventory management thanks to transparency and traceability
  • Monitor the product’s history and validate its provenance with time-stamps for risk mitigation and risk management.
  • Decrease paperwork and money spent on automation.

Overall, from decreasing paperwork and money spent in contract management to automating the payments based on preset conditions, using blockchain technology in Logistics will increase companies’ efficiency and effectiveness in the future. But why in the future? Why do companies not adopt blockchain technology to their Logistics right now?

As the name describes, Smart Contract Programming requires expertise to code. Moreover, evolving from traditional Logistics to blockchain-based Logistics is difficult for many reasons including the lack of knowledge of the possibilities that blockchain technology can provide.
When building blockchain-based Logistics workflow with Smart Contracts, companies must have an innovative approach, but how do you think in a language that you do not know how to speak it?

Here, Trakti, an end-to-end contract life-cycle management platform – the first to integrate contract management into blockchain technology – plays the translator role for companies.
Trakti is a no code platform. Therefore, it enables companies to create Smart Legal Contracts in simple ways, by using pre-existing templates or creating your own. In this way, a company can benefit from blockchain technology without knowing how to code and start using right now blockchain technology in Logistics to shape the future, increase their efficiency and competitiveness by adapting the latest technology.

To have a better understanding of Trakti’s framework, and of what you could achieve with Trakti, visit our Features page.

Related Posts

Take a look at these posts