The swelling of the world’s population may be considered the main factor for the growth of production and the demand for goods and services. In fact, economic growth is a necessary measure imposed by the demand of businesses for growth in a competitive environment. The only way to achieve that growth is incessant production and constant increases in push-demand consumption models through marketing and other instruments. It can be said that demand is artificially inflated, but the reality underlying economic powerhouses remains the same.
Everything in the world stands on the pillars of logistics, and with the increase in production, the burden on logistics companies grows as well. Companies have to resort to 3pl (third-party logistics) services that ensure the supply of goods around the world. But the modern system is starting to quake under the incessant pressure of increasing production volumes, resulting in inefficiency and ineffectiveness in the supply chain operations and losses for both suppliers and buyers.
How It Works Now
The cycle of 3pl operations is quite simple if viewed from a bystander’s angle. A company places a product for sale, the client selects the goods, orders the delivery of said goods, and the company turns to a logistics companies that undertakes the delivery of the product.
However, the end customer is not aware of the conditions under which the goods are being transported. This is common issue that results in damaged goods deliveries, time delays and other inconveniences as a consequence of the myriad issues and parties involved in the logistics chain. Both the client who received the goods and the company selling the goods will suffer damages. The client receives damaged goods or with delays and is unsatisfied with the level of service, and the company has lost the product, reputation points and sometimes even costs involved in replacing the damaged product.
The Credits Blockchain and Alibaba Cloud Based Solution
The advent of blockchain technologies with their inherent characteristics of high transaction speeds, transparency of operations and low commissions costs has ushered in a new wave of solutions for a great many industries, and the logistics sector is one of the biggest that can benefit from the technology. Companies that has risen to the challenge is the Credits platform and Alibaba Cloud that offers blockchain and cloud based solutions for its clients in various business sectors.
Blockchain can solve the problem of transparency of the delivery process and its conditions. The Credits platform offers a solution for maximizing delivery process transparency by allowing its clients to receive data from sensors installed directly in the transportation containers. All the data pertaining to the delivery process will be recorded, verified, transmitted and displayed via the decentralized blockchain network and cloud service of Alibaba in a specialized app designed for the customers. The data itself will be stored both in the Alibaba cloud service and on the Credits blockchain, either in a public or private network, depending on the needs of the client.
By using the real-time data feeds offered by blockchain technologies, each client will be able to learn the current delivery status of their product, as well as the temperature conditions in which the goods are being transported along with other information necessary for proper product delivery. Such transparency will work for the benefit of both transportation companies and clients. The companies will be able to get rid of unnecessary bureaucratic procedures associated with paperwork during product delivery. The clients will have a say about the way their products are being shipped and will have the opportunity to contest any faults during delivery and demand compensation.
A simple example of how the clients will benefit from the installation of sensors operating with the Credits blockchain platform is a case of non-compliance with the temperature conditions of transportation and resulting damage to the product. Thanks to the data transmitted by the sensor and its verification on Credits and Alibaba Cloud, the client will have irrefutable facts to prove infractions in the delivery process and will be able to receive compensation. Given that blockchain data cannot be deleted or edited, this will allow recording all changes in the data from the sensors without any interference from third parties.
The use of such devices will have a positive impact on the logistics industry as a whole. The level of service will increase along with the trust between the seller and the buyer, which will lead to an increase in the loyalty of existing customers and attract new ones.
How The New System Works
The solution being offered works on a principle that is both simple and ingenious in its operation.
Everything starts with special, easy to produce and inexpensive sensors with a programmable frequency being installed inside the shipping container. The sensors will be able to monitor the temperature inside the container along with other data.
All of the atmospheric parameters will be recorded by the sensor. The data will then be stored on the blockchain network and sent to customer support service application. The client will be able to access the application and input the shipping container’s number. The information about the state of the temperature regime inside the container will be updated at certain time intervals in the app and the client will receive near real-time updates about any changes in the environment inside the container being used to transport the products.
Temperature is by far not the only information that the sensors can be designed to record. It is also possible to adjust the sensors to record other indicators, such as cargo weight, the pressure inside the container, etc. All of these parameters can be vital if the goods being delivered are of a sensitive nature, such as foods, flowers, animals or any other products whose state is dependent on the transportation environment.
Centralized Vs. Decentralized
The current model of operation of 3pl solutions is entirely centralized and that is the core of most of the logistics industry issues.
Uncontrolled changes in any centralized system deployed on solutions of non-connected data are possible, as the data is subjected to an error/attack. When using the blockchain storage concept, any data placed on the blockchain cannot be deleted or altered, and any data change undergoes approval requests by all participants on the platform prior to the changes being introduced.
False data entry in centralized systems are common. In case of Credits-based decentralized solutions, the interconnected devices have secret keys generated and installed at the equipment level. When any data is sent, the network consensus checks the validity of the data by checking the validity of the bundle, the sender’s public key, data set and signature.
The scalability problem is relevant in a centralized system, as it can only be scalable if the system for synchronizing and replicating data from a central server to an expansion server is expanded and refined.
A decentralized platform, on the other hand, supports an unlimited number of accounts used in the system, as each participant in the system can install software nodes and can become an additional guarantor of the data’s safety and validity.
The problem of expanding business logic solutions in centralized systems can be solved only by finalizing the current software solution, or by finalizing custom codes in the repository. In both cases, the code cannot be validated by users and trust in it decreases. In decentralized solutions, any business logic can be expanded by updating/adding custom code in the form of smart contracts, which allows users to quickly introduce changes to current business processes. All the codes can be open for general audit to ensure that they are valid and do not contain malicious or compromising pieces of code.
Rapid data entry/provision in centralized systems is possible if signature validation is used. In this case, the verification process can slow down the system, as it results in high loads on the system if it is an expanded infrastructure. In Credits and Alibaba Cloud based decentralized solutions, all the data is entered by sensors and contains a signature field that certifies its accuracy. The data can be signed and encrypted to ensure high confidentiality when using public networks.
Access to the platform from external applications for centralized systems is provided either by additional development of the API / integration bus module or by providing direct access to data in the database.
In decentralized systems, access is granted via using standardized methods developed for all modern programming languages, thus ensuring ease of integration.
The human factor in data corruption is common in centralized systems, thus rendering them vulnerable to error. Credits-based decentralized systems exclude the human factor altogether, as the data entered in the blockchain cannot be changed and is received directly from tethered devices.
Logistics is the set of legs the global economy stands on. But with the ever-increasing volumes of production, those legs are starting to shake. Snowballing paperwork with intermediaries involved in the logistics chain and the chance of error are resulting in losses for both sellers and buyers.
The appearance of blockchain and cloud based logistics solutions, such as those on the Credits platform together with Alibaba technologies will allow for building trust between suppliers of goods and consumers, increase the quality of services and the number of customers. Old challenges require new solutions and Credits together with Alibaba Cloud Services are a proven technology with multiple benefits that the logistics industry can rely on.