ShipChain Leverages Blockchain Technology to Create Transparency and Accountability Across the Supply Chain

ShipChain Leverages Blockchain Technology to Create Transparency and Accountability Across the Supply Chain

credit card news

Adam West
By: Adam West
Posted: July 8, 2019
Our experts and industry insiders blog the latest news, studies and current events from inside the credit card industry. Our articles follow strict editorial guidelines.

In a Nutshell: Supply chain transparency can allow companies to quickly address inefficiencies, theft, fraud, and other logistical problems. And ShipChain leverages blockchain technology to bring greater accountability and accuracy to shipping and cargo tracking, and save time, money, and resources. The service integrates easily with existing systems and modes of transportation, providing insights into product origination and transit for both companies and consumers. ShipChain also fosters greater efficiency and confidence, allowing businesses to focus on growth instead of worrying about inventory.

Businesses in the United States lose upwards of $30 billion each year to commercial cargo theft. And the actual figure may be much higher, since some companies may refrain from reporting missing shipments out of concern for their reputations or insurance premiums.

But the net result is a significant loss, in more ways than one. The stolen stock never makes it to market, creating scarcity for consumers, and the company’s bottom line absorbs the hit.

Businesses recover less than 20% of stolen cargo, and one factor in that low rate is a lack of reliable tracking information. Without accurate tracking, no one knows where in the supply chain the goods went missing. That is the problem ShipChain set out to solve through transparency and technology.

Screenshot of ShipChain website graphic

ShipChain allows businesses to easily track inventory through blockchain technology.

ShipChain was founded by five individuals who worked in separate industries, each beset by shipping complications. Inaccurate or absent tracking information meant they often had no idea where goods were in the supply chain, which inevitably led to financial losses. Together, the group came up with the idea of using the blockchain to remedy that lack of transparency.

“Everyone who orders something experiences that at some point or another. You get told your shipment’s on its way, but you have no idea where it is, and you have no idea when it’s going to get there,” said Devika Soni, Marketing Manager at ShipChain. “It doesn’t really matter what industry you’re in. Any company that ships items relies on logistics and has a supply chain.”

ShipChain offers end-to-end tracking of goods for those companies. The comprehensive solution creates greater visibility and cuts down on the time and effort lost on dealing with shipping hiccups.

And ShipChain is applicable — and beneficial — to any industry. It offers efficiency in all aspects of shipping and logistics and is designed to integrate easily with existing systems to save even more hassle.

Improving Operations by Revealing Supply Chain Details

Blockchain is probably best known for its role as the foundation of cryptocurrency. The technology’s transparency and security make it ideal for trading and transacting in internet-native currencies like Ethereum — the blockchain on which ShipChain operates.

But the technology also has practical applications in other areas.

“The most important thing about blockchain technology is that it adds a layer of visibility and accountability that doesn’t exist right now,” Soni said. “That’s important for anything, but in terms of shipping and logistics, billions and billions of shipments go unaccounted for because they disappear somewhere in the supply chain.”

And if a business can’t pinpoint where the shipment went missing, it typically suffers a loss on that inventory. But blockchain can help those businesses keep track of shipments throughout the process.

On the blockchain, every interaction — whether it’s the exchange of Bitcoin or the movement of a shipment of smartphones — is recorded as a discrete unit of information called a block. Each block links to the immediately preceding and succeeding blocks, “chaining” them together in the digital ledger. Blocks cannot be moved around within the chain, they can’t be altered or deleted, and new ones cannot be added.

When applied to shipping, blocks record the movement of goods through the supply chain, which creates a comprehensive digital trail throughout the process. That transparency also establishes greater accountability; if something goes wrong, a reliable record exists of where the shipment has been and who was responsible for it last. The ShipChain process eases the logistical strain, increases productivity, and circumvents other industry-specific problems.

“We’ve been trying to push different use cases for the blockchain,” Soni said. “With the way that industry is, a lot of people know the term blockchain, but not a lot of them know what it can mean for their company.”

Transparency Mitigates Costly Errors, Losses, and Fraud

ShipChain has finished a pilot program with Perdue Farms and is currently in the process of researching even more use cases for its products. These will show potential adoptees how much money and time they can save by applying blockchain technology to shipping. Moreover, they will also showcase its usefulness in various industries.

One of the most prominent use cases is food, and the problem of recalls serves to illustrate its value. According to Food Safety Magazine, the average direct cost of a food recall is $10 million. Beyond that, companies suffer damage to their brand integrity and additional loss of sales. But by using blockchain to track the movement of goods, a recall could conceivably be circumvented at the first sign of trouble.

Screenshot of ShipChain workflow

ShipChain boosts transparency by adding tracking information to the blockchain automatically.

When contaminated goods are identified, blockchain records make it easy to see where they’ve been and determine the cause or source. And it’s just as easy to know where the contaminated goods are in the supply chain and to stop them before they reach the market. That is a more effective solution than pulling all of the products off shelves.

The technology also holds similar value for the pharmaceutical industry. And, more generally, blockchain can be useful in identifying inefficiencies and losses, enabling companies to remedy problems that would otherwise remain functionally invisible.

“If there’s someone or some department that’s doing something wrong, you can pinpoint it pretty easily. And you can get rid of the people engaging in fraudulent acts,” Soni said. “You’re also freeing up so many resources that would have been used to deal with those issues.”

Easy Integration and Application Increases Value for Retailers and Consumers

ShipChain is designed to easily integrate with existing proprietary systems as well as with available shipping methods. The ease of deployment represents value not only for the company but also for its customers.

Those extensive integration capabilities bypass the pain points of costly overhauls and productivity losses, which saves money in both deployment and training.

“We realize that all these systems take a long time to implement in the first place,” Soni said. “It takes years of training, years of learning, and we would never expect anyone we’re working with to scrap all of that. Our platform is designed to sit on top of what’s already going on.”

Additionally, ShipChain is intermodal; it can be applied to any means of transit, whether local or intercontinental. Currently, the technology focuses on large cargo shipments, and it works via monitoring hardware installed in each truck, plane, or cargo container. That coverage and attention to detail foster confidence not only in businesses but also in consumers.

Photo of ShipChain Marketing Manager Devika Soni

ShipChain Marketing Manager Devika Soni spoke with us about the company’s significant benefits.

“When consumers go to the grocery store, they want to know more about the food they’re about to purchase. Is it organic? Is it locally grown? And just because the food label says so, how can you verify its legitimacy?” Soni said. “Blockchain is an easy way for people to verify that the marketing on that product is accurate.”

Food & Wine reports that 36 million pounds of industrially grown soybeans originating in the Ukraine and Turkey in 2017 were labeled and sold as organic in the United States. Consumers weren’t getting the product they wanted — and had paid higher prices for — and the implicated brands took a hit to their integrity.

Public blockchain transparency again offers a solution by allowing consumers to see the history of the food they’re about to purchase — ensuring they’re getting what’s advertised. In addition to bolstering internal efficiency and reliability in transit, the technology boosts trust, which can quickly strengthen a company’s bottom line.

Case Studies Demonstrate ShipChain’s Operational Value

With upward of $30 billion in goods lost to cargo theft each year, numerous industries stand to benefit from adopting blockchain for tracking. In the medical supply field, companies can ensure critical equipment meets necessary health and safety standards.

Logistics services providers can use ShipChain to monitor where cargo is and when it will arrive at its destination, keeping operations moving smoothly. And retailers can depend on it to track their goods, no matter where they may be.

ShipChain effectively combats theft, fraud, and inefficiencies, which enables operations to optimize their internal efficiency. And blockchain transparency enhances consumer trust and satisfaction. And all of these contribute to higher profitability.

And the company is currently working with partners to develop more case studies to demonstrate its value across industries. These comprehensive use cases will illustrate the product’s applicability and value to any business that relies on shipping.

“The figures will speak for themselves, and that will get people to understand that it’s worth trying,” Soni said. “Hopefully, those results will translate into more businesses realizing that it’s worth adopting.”

The benefits are clear. ShipChain offers easy integration with existing systems, and blockchain technology provides a transparent view of the supply chain. That reduces operational costs and boosts accountability and consumer confidence.