High competitiveness and intense price pressure characterize the logistics industry. Involved entities are used to outsource part of their operations to cut costs, leading to many intermediaries. As a result, data sharing is limited, and transparency is low due to unknown go-betweens that take on tasks as subcontractors. Additionally, unstandardized processes and data availability issues make supply chain management inefficient.
These issues are amplified by the dominance of manual labor and paper-based processes often employed in logistics.
The traceability problem
Logistic operations are complex and require repackaging, aggregating, and disaggregating units until they reach the consumer. Consequently, counterfeited products are challenging to identify and remove from the market.
- Counterfeit products
Not only can this damage brands when fake, but low-quality products also get associated with a brand name; it can have much more severe consequences in the case of pharmaceuticals, for example.
- Brand damage
A health risk
According to Interpol, around 1 million people die from counterfeit drugs every year. The problem is even more critical in emerging markets, where up to 30 percent of pharmaceuticals are counterfeits based on Interpol research.
- Increase in deaths
Blockchains can overcome the serialization issue by saving the hash of a QR code to a tamper-proof ledger. This shared ledger acts as a single source of truth, allowing for easy verification, vastly improving data availability and transparency.
By digitizing processes, operations become cheaper, more efficient, and less susceptible to errors and fraud.
- Lower costs
Companies gain the advantages of operational efficiency, reduced risk of counterfeiting, more comprehensive and real-time data, and a way to establish direct relationships with consumers through tracing apps.
- Increased trust
Consumers have certainty about the authenticity of their goods and can quickly get additional information about products.
- Safe and secure