Digitization is changing business models because of its potential to reduce cost and risk, increase speed, and enable businesses to deliver better customer service. But it is more than converting paper documents into an image and passing it to others in the supply chain. The value add lies in the ability to extract and analyze data. Several technologies enable digitization including internet of things (IoT), artificial intelligence (AI), virtual and augmented reality, 3D printing, drones, robotics and automation, and blockchain and digital ledger technology (DLT).
In supply chain and logistics, an information flow goes along with the physical flow of goods. That information flow can be embedded on a blockchain or DLT platform that holds an immutable, traceable history and serves as a single view of the truth.
Companies can share information securely with an ecosystem of stakeholders, thereby improving transparency and visibility. Workflows can be simplified and non-valued added steps can be taken out of the process. For instance, contract terms can be enforced and payments executed automatically through smart contracts, resulting in accelerated, error-proof execution. Ultimately, this improves efficiency and predictability while reducing costs.
Back in February 2021, Sergei Beliaev, EVP & Chief Strategy Officer at DLT Labs, explained to the New York Supply Chain Meetup how Walmart Canada uses blockchain to improve freight invoice reconciliation, a process in which hundreds of variables could come into play at different points in time.
The document and invoicing flow follows a sequence, he explained. The load gets tendered, a bill of lading is generated, and transportation takes place. Events happen along the road, and ideally, if the GPS and IoT devices are deployed, this information is captured and used to validate the contract terms. Then the goods are delivered, and the invoice is generated – possibly weeks later, by which time the sources of conflicts are sometimes lost in the shuffle.
In contrast, the blockchain is a shared version of truth that allows companies and carriers to generate a common record as soon as the contract is tendered. All authorized parties can see it immediately. The bill of lading is recorded on the blockchain or DLT, which is the basis of the invoice. Smart contracts look for discrepancies that can alert participants to start a resolution process as soon as possible while the context is still known. IoT devices provide real-time information as transportation takes place. If a truck has to go through a detour and incur extra mileage, for example, it is recorded on the blockchain, and authorization by the dispatch happens in real time. By the time delivery takes place, the invoice is generated. It just has to be reviewed, authorized and pushed into the ready-for-payment status.
Before deploying this approach, Walmart Canada had up to 70% of its invoices in dispute at any given time, according to Beliaev. Now it’s under 1%. Not only are carriers getting paid faster, but Walmart can also offer receivables financing either by discounting the invoices, or submitting them to a financial institution.
To sum up the benefits, the number of disputes have been reduced significantly, and payment processing to the carriers has been accelerated. Invoicing and auto-approvals are done in real time, which has reduced the administrative load on both sides. Audit exceptions are much less frequent. Additionally, end-to-end supply chain visibility has improved. A core record of supply chain events is assigned to a specific order or load. Additional information, such as cold chain visibility, is attached to the record as well, and that data can be analyzed and used for AI purposes.
Digitization is changing business models because of its potential to reduce cost and risk, increase speed, and enable businesses to deliver better customer service. But it is more than converting paper documents into an image and passing it to others in the supply chain. The value add lies in the ability to extract and analyze data. Several technologies enable digitization including internet of things (IoT), artificial intelligence (AI), virtual and augmented reality, 3D printing, drones, robotics and automation, and blockchain and digital ledger technology (DLT).
In supply chain and logistics, an information flow goes along with the physical flow of goods. That information flow can be embedded on a blockchain or DLT platform that holds an immutable, traceable history and serves as a single view of the truth.
Companies can share information securely with an ecosystem of stakeholders, thereby improving transparency and visibility. Workflows can be simplified and non-valued added steps can be taken out of the process. For instance, contract terms can be enforced and payments executed automatically through smart contracts, resulting in accelerated, error-proof execution. Ultimately, this improves efficiency and predictability while reducing costs.
Back in February 2021, Sergei Beliaev, EVP & Chief Strategy Officer at DLT Labs, explained to the New York Supply Chain Meetup how Walmart Canada uses blockchain to improve freight invoice reconciliation, a process in which hundreds of variables could come into play at different points in time.
The document and invoicing flow follows a sequence, he explained. The load gets tendered, a bill of lading is generated, and transportation takes place. Events happen along the road, and ideally, if the GPS and IoT devices are deployed, this information is captured and used to validate the contract terms. Then the goods are delivered, and the invoice is generated – possibly weeks later, by which time the sources of conflicts are sometimes lost in the shuffle.
In contrast, the blockchain is a shared version of truth that allows companies and carriers to generate a common record as soon as the contract is tendered. All authorized parties can see it immediately. The bill of lading is recorded on the blockchain or DLT, which is the basis of the invoice. Smart contracts look for discrepancies that can alert participants to start a resolution process as soon as possible while the context is still known. IoT devices provide real-time information as transportation takes place. If a truck has to go through a detour and incur extra mileage, for example, it is recorded on the blockchain, and authorization by the dispatch happens in real time. By the time delivery takes place, the invoice is generated. It just has to be reviewed, authorized and pushed into the ready-for-payment status.
Before deploying this approach, Walmart Canada had up to 70% of its invoices in dispute at any given time, according to Beliaev. Now it’s under 1%. Not only are carriers getting paid faster, but Walmart can also offer receivables financing either by discounting the invoices, or submitting them to a financial institution.
To sum up the benefits, the number of disputes have been reduced significantly, and payment processing to the carriers has been accelerated. Invoicing and auto-approvals are done in real time, which has reduced the administrative load on both sides. Audit exceptions are much less frequent. Additionally, end-to-end supply chain visibility has improved. A core record of supply chain events is assigned to a specific order or load. Additional information, such as cold chain visibility, is attached to the record as well, and that data can be analyzed and used for AI purposes.
Tags: blockchain, digitization, distributed ledger technology, freight, logistics, supply chainCategorized in: Uncategorized
This post was written by Sententia Partners