Efficient management of procurement operations and supply chain functions is critical to business operations of a company. Till date, there has been a lot of investment in ironing out problems in the supply chain but even then, the data flow continues to be inefficient and most managements do not have the kind of visibility they would prefer in their supply chain process. “Blockchain technology has come a long way in the last few years and although we are far away from mainstream adoption, it is interesting to see that this technology is starting to gain traction in the shipping and logistics industry. Blockchain technology aims to solve the inefficiencies in the supply chain by digitizing the entire process. As the inefficiencies are removed, the bottom lines of a company improves”, says Praveen Sinha Jabong Co-Founder and Pincap MD.
Relevance of blockchain in today’s world
With the huge surge in retail and e-commerce in the last decade or so, the Indian Logistics Market has grown to a size of $215 Billion and is expected to keep growing with more and more players joining the likes of Delhivery, Xpressbees, Ship rocket, E-Com Express etc.
In a post-covid environment, more questions are going to be asked by consumers on the origins of the products they are purchasing especially in industries like food packaging, agriculture and dairy. Companies running the present legacy systems find it difficult to answer these questions due to the complexities of the legacy supply chain systems they have employed. “Traceability of origin is a big use case of blockchain technology and this has gained a new found relevance in the post pandemic world. In China, we have seen retail giants Walmart work with the likes of Vechain, to address this. Consumers purchasing products off the shelves of Walmart stores in China now can scan the barcode of their packages and access valuable information about the origins of the product which was earlier not possible,” adds Sinha. Blockchain has made a significant impact in industries such as retail, healthcare and manufacturing and this technology is expected to impact every being on this planet in the coming decades.
Hindrances to adoption
According to the World Economic Forum, streamlining information through blockchain has the potential to increase trade by 15%. However, many are on the fence in regards to its adoption due to the uncertainty around cryptocurrencies in India. “It is hard to have a conversation about blockchain without mentioning how blockchains have led to the creation of the parallel digital asset economy or cryptocurrency. While blockchains have proven their use case beyond crypto, to the uninitiated, it is a tough concept to explain. With the lawmakers in India still unable to decide on whether they want to regulate or ban cryptocurrencies and crypto trading, the blockchain companies offering solutions are also seeing limited growth in their prospects.” feels Sinha. “Also, while transactions on a blockchain are tamper proof, it still cannot guarantee 100% efficiency in the supply chain as human involvement in the process can contribute to intentional or unintentional discrepancies in the process,” added Sinha.
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Recently, the Indian Port Community System has started working with Slovenia based blockchain firm CargoX in order to digitize bills of lading and other trade documents. CargoX added that the Indian government is exploring other use cases of their technology which can help in smoothening the import-export business across the various ports in India. “The participation of the Government agencies in exploration of blockchain technology is definitely a welcome sign and bodes well for the future of the industry. With the potential that this technology has, we should consider being one of the early adopters rather than being left behind,” concluded Sinha.
Pincap recently hired Amit Pandey as their new CEO to further strengthen their foray into supply chain financing. A proven professional in the supply chain business, Amit’s arrival comes on the backdrop of Praveen Sinha making a strategic investment in iKargos, an online cargo management company that is using technology to ease international and domestic logistics.
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