Posted by Guru Rao

Grocery delivery services and biopharmaceutical makers appear to be on a collision course with blockchain, bitcoin’s underlying technology, of all things.

Far from just an enabler of crypto currency, blockchain has potential to transform one of the most challenging components of modern logistics: the cold supply chain. This is critical for several reasons:

  • Grocery delivery services are growing fast and are expected to account for 20 percent of the market by 2025, according to a Food Marketing Institute and Nielsen report. That’s a lot of perishable foods that need to be chilled for extended periods while in transit.
  • The market for biopharmaceuticals (any drug that is synthesized using biological ingredients) is expected to be worth $291 billion by 2021, according to Mordor Intelligence. Because the active product ingredients in these drugs are biological, many of them must be stored within precise temperature ranges to maintain potency.

Clearly, pressure is mounting on pharma firms and grocers to optimize their cold chain logistics. It’s a complicated problem, and it’s an expensive problem. Pharma alone expects to spend nearly $17 billion by 2020 on cold chain management. Add in grocers and other perishable-reliant markets, and that number starts to climb fast.

So where does blockchain come in?

Blockchain is a shared, digital ledger that lacks a single point of control. Each participant in a blockchain ledger (which is essentially a record sheet with various line items) is in control of his or her own version of that ledger. Every time that participant updates his or her ledger, that input is checked against every other participant’s ledger to determine the accuracy of the new claim. In this way blockchain creates what the Harvard Business Review calls “a global system for mediating trust and selective transparency.”

When applied to the cold chain, blockchain can create secure documentation of storage temperatures at every point in a product’s journey. This helps supply chain managers identify potential sources of contamination, or even non-compliance with the Food Safety Modernization Act (FSMA).

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Implications for last-mile delivery

And it’s not just upstream shipping and storage operations that benefit from blockchain. Take the example of Walmart. According to PYMNTS, the retailing giant has been working on a patent that will allow it to use blockchain for delivery drones. Walmart intends to apply it to the “logistical aspects of the service, such as tracking and package identification.” PYMNTS noted that this will be especially important for “sensitive items, including food and medical samples.”

A more immediate example of blockchain’s utility in delivery tracking is the use of mobile fleet management tools. Namely, put a smartphone in the hands of delivery fleets, and make cloud-based dashboards (their own “ledger” so to speak) available to stakeholders (customers, operations, executives, etc.). In doing so, you effectively create a unified trust architecture. Factors such as current shipment location and proof of delivery are verified in real time by the different stakeholders. This ensures accurate delivery tracking, quality control and perhaps most importantly, customer satisfaction.

Blockchain inspired delivery tracking may sound complicated, but it’s actually quite simple. Click on the banner below to learn more.

Blockchain for your cold chain: Here's how it works