Technology for MSMEs: The genesis of blockchain technology dates back to the 1990s but it became mainstream only in 2008 when Satoshi Nakamoto brought crypto to the table with bitcoin. Blockchain was meant to be a feasible computational method for time-stamping digital documents to avoid manipulation. Today it is as mainstream as it can be. In today’s day and age, blockchain is slowly being discovered by the MSMEs engaged in the business of logistics as a solution to numerous challenges that make them vulnerable to inefficiencies and delays in processes.
Benefits of blockchain in logistics
Transparency and Traceability
Blockchain is necessary as it enables traceability and transparency throughout the supply chain. MSMEs can leverage technology to track the consignment journey from pick-up to delivery. It can assist businesses in keeping note of fault lines and discrepancies causing a delay in the supply chain and eventually, can mend it quickly for improved customer experience.
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The supply chain is an extensive process that necessitates attention at each milestone. Increased manual work typically compromises efficiency hence, blockchain technology can streamline the process by automating all manual tasks. For instance, automating payment processing and reduction of intermediaries can help to keep a check on operating costs and strengthen the bottom line.
Data tampering or vulnerability of sensitive information are unfortunate but common occurrences that make the investment in cybersecurity imperative. Blockchain offers a distributed ledger system that stores data across multiple nodes as opposed to at one central database. This makes it difficult for hackers to alter any data or information and it is specifically beneficial for MSMEs due to the lack of assets.
The logistics industry follows an extensive and structured supply chain with numerous stakeholders including, suppliers, customers, and partners but blockchain gives access to the deals and shipments to all of them. They can share data securely, and reduce misunderstandings and disputes on figures and statistics, helping to improve overall collaboration.
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Challenges of implementing blockchain technology in logistics for MSMEs:
High Initial Costs
The initial investment is heavy and MSMEs usually lack the financial resources and technological expertise to implement blockchain effectively. However, the benefits of blockchain can outweigh these initial costs.
Integration with Existing Systems
One of the biggest reasons for the disparity in the industry is the inconsistency of resources like technology and manpower. Blockchain requires both, a certain level of technological expertise as well as intricate software and hardware to complement it. MSMEs that want to implement blockchain technology will need to integrate it with their existing systems and processes. This can be challenging, particularly if their systems are outdated or not compatible with blockchain technology.
Regulatory and Legal Issues
Blockchain technology is a complex system for a beginner with elaborate regulations and legalities, particularly when it comes to data privacy and cybersecurity. MSMEs need to be pragmatic to gain knowledge about the same else the consequences can be hefty fines and reputational damage.
To survive and thrive adopting to change, technology is critical. There is no denying that every coin has two sides and similarly, blockchain technology has benefits as well as some cons but looking at the bigger picture and the possibilities for the logistics industry, it might be an area worth exploring.
Meheriar Patel is the Group CIO at Jeena & Company. Views expressed are the author’s own.
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