Security, transparency and efficiency. If there is a sector that can benefit from blockchain technology, it is logistics. It is up to companies to get on that train, believes Louis de Bruin, Blockchain Leader Europe at IBM. Ahead of the Blockchain Conference 2018 on 1 November, he answers 7 questions about blockchain in logistics.
Looking at the current application of blockchain in logistics, where are we?
"We are quite far along. Blockchain appears to be a very natural application for logistics. One of the first blockchains we brought live is the 'dispute resolution Blockchain', an ecosystem in which many parties trade with each other. Where trade takes place, all sorts of small disputes occur, for example a signature that is missing. This causes a huge delay. On average, that delay is 44 days. By applying blockchain, this can be reduced to a few days or even minutes. We still have hundreds of projects running worldwide, many of which are in the logistics sector.
In the Netherlands, blockchain is already at a more advanced stage than in some other countries. Our country is automated and rationalised: we hardly have any banks left in the streets, no post offices. Moreover, we are a polder country. And polderland is actually a kind of prototype of the blockchain approach. That is why you see a great willingness here to look at a blockchain approach to processes."
Why does blockchain offer added value to this sector in particular?
"One of the benefits blockchain offers is transparency. Logistics involves an entire chain, which is not directed by anyone. Parties therefore have to check everything multiple times and the administration runs into paperwork. The cost of transport is almost as high as the cost of administration. This is when blockchain comes in handy. They also call it the trust machine. All information is simultaneously available everywhere. Then if something is wrong, it is quickly noticed because it is everywhere. That is a huge reassurance. Moreover, you don't have to pay anyone to act as a central orchestrator."
In an earlier LogistiekProfs interview with supply chain trend watcher Martijn Lofvers, he referred to blockchain as "the hype of all hypes". Can you imagine that?
"I know there are people who say this. However, the internet also used to be a hype. Not all the parties that bet big on it in the 1990s made it. You see the same with blockchain now. A lot of parties are jumping on top of it as if it were hairpulling oil. That is why it is important to see what really works. We always take a critical look at that at IBM."
What would you advise companies looking to get started with blockchain?
"First of all, immerse yourself in it. Go over your business processes and see what can be done differently. Providers have certain models that you can then use to investigate whether blockchain could be useful for this. Then try to model that to how it works for you, your customers and your suppliers. Involving chain partners often already leads to better chain cooperation, even if it does not ultimately lead to a blockchain application.
As a company, at least don't wait quietly. Then you will miss the boat. One example: a party saw that one of our blockchains provided a service that they had as a business model. They got into it thinking: 'We better start understanding how that works quickly, and define our new role, before we are no longer relevant'."
What kind of investment should organisations think of?
"The investment is not huge. It is existing technology and it can be in the cloud. A big investment is the mindset change. Within every organisation you see enthusiastic groups and groups that see it as threatening. Then there is the integration into business processes. If you can make good money for another five or 10 years with the existing business model, you shouldn't throw the baby out with the bathwater. Then the key is to look at how to integrate the existing models with a blockchain approach."
Besides the opportunities, are there any pitfalls or risks that the sector should be aware of?
"The main pitfall is to limit yourself to a specific technology too early. You have to keep an open mind. Another pitfall is that you don't fully understand blockchain at an early stage anyway. It's not rocket science, but it's not easy either. My advice is: start small and start fast. Make (small) mistakes and learn from them."
Finally, you are chairing the Logistics session at Blockchain Conference 2018. What can visitors expect from that day?
"It will be an interesting day with sessions from both experts and experience experts, including the Koopman Logistics Group, the very first Dutch medium-sized logistics company to start working with blockchain. I expect high energy levels. Problems that companies took as a given for a very long time, blockchain now shows that they can be addressed. The day is interesting for all knowledge levels. It is good to have some basic knowledge, but the speakers present are now capable of explaining blockchain to audiences from 8 to 88."
Blockchain Conference
On Thursday 1 November, Utrecht will host the national Blockchain Conference . A unique high-level conference and networking event where the possibilities of blockchain in logistics, among other fields, will take centre stage. Besides Louis de Bruin, speakers from Koopman Logistics Group, Fair Food, The Dow Chemical Company, Vandebron,Blocklab, Capgemini and Hogeschool Rotterdam, among others, will also take the stage . As our relation, you will now receive €50 discount on your participation. For this, register via www.blockchainconferentie.com o. v.v. LGPROFS50, note: only valid until 25 October!
