DHL and Accenture explore blockchain in logistics
March 14, 2018
DHL has released a trend report in cooperation with technology consultant Accenture on blockchain technology's potential to transform the logistics industry. Global supply chains are notoriously complex, with a diverse set of stakeholders, varying interests, and many third-party intermediaries, challenges that blockchain is well suited to address.
The report includes initial findings on a working prototype developed by DHL and Accenture, which tracks pharmaceuticals from the point of origin to the consumer, preventing tampering and errors.
"The experiments with blockchain in finance are well known, but we believe logistics is an area where the new technology will have a truly profound impact," said Matthias Heutger, senior vice president at DHL. "Implementing productive solutions however, will require further technological development and, critically, collaboration between all stakeholders."
Blockchain is a type of database system that maintains, records and authenticates data and transactions. In supply chains, products are assigned unique identifiers that allow their entire history to be captured as it moves to the end customer. Stakeholders validate this information in real time and if anyone tries to tamper with, alter or erase a record, everyone will know.
"We see especially exciting potential for blockchain in pharmaceuticals, which is why we focused our proof of concept with Accenture on the life sciences and healthcare industry," said Keith Turner, CIO for DHL Supply Chain. "By utilising the inherent irrefutability within blockchain technologies, we can make great strides in highlighting tampering, reducing the risk of counterfeits and actually saving lives."
As many as one million lives are lost each year due to counterfeit medications, according to Interpol, and it is estimated that up to 30% of pharmaceutical products sold in emerging markets are counterfeit. DHL and Accenture created a blockchain-based serialisation prototype with nodes in six geographies to track pharmaceuticals across the supply chain. The ledger tracking these medicines may be shared with stakeholders, including manufacturers, warehouses, distributors, pharmacies, hospitals and doctors. Lab-simulations show how blockchain could handle more than seven billion unique serial numbers and 1500 transactions per second.
"We've worked closely with DHL to understand and document the broad impact blockchain will have on supply chains of the future," said Andreas Baier, Accenture lead for the travel and transportation industry. "Using a common, indelible and secure ledger, the industry can achieve much higher safety standards – from the factory to the patient – at much lower cost. This is one of several opportunities blockchain affords to restructure business processes while reducing cost and complexity."
Blockchain technology shows promise for improving the efficiency and reliability of supply chains in all industries. According to the International Data Corporation (IDC), global spending on blockchain is forecast to reach US$2.1bn in 2018, more than double the $945m spent in 2017. In 2021, annual spending is expected to reach $9.7bn.1
DHL and Accenture's pharmaceutical prototype is just one of the use cases highlighted in their trend report. Blockchain could also be used for asset management, to improve transparency and traceability, and to automate commercial processes with smart contracts, which facilitate and verify the performance of contracts without third parties. The potential for blockchain in logistics is significant. However, moving from concepts and pilot applications to deploying viable services will require the technology to be further developed, organisational transformation and a willingness to collaborate between all stakeholders. Success depends on all parties working together to transform legacy processes and to adopt new ways of creating logistics value.