The potential of blockchain technology for the Finished Vehicle Logistics industry

Members Corner

Source: VINTURAS, 2020-10-14

This is an opinion piece and does not necessarily reflect the views of ECG

COVID-19 has had a significant impact on the Finished Vehicle Logistics (FVL) business in Europe in the past months. And more than ever the necessity for visibility in the supply chain has become obvious. Many Logistics Service Providers for instance have suffered of lack of information on incoming shipments. OEM’s have not been able to tell their stakeholders what to expect on deliveries and sales as legacy systems often cannot cope with the need for real-time information and the rapidly changing business environment.

And real-time information is what is needed. Real time information, not only on truck movements and ETA, but for on all logistics events and all transactions in the supply chain, so the integral supply chain process can be orchestrated and optimised.

State of the art technology can provide this real-time information of course, but is often designed for 1:1 relationships, between LSP’s and OEM’s. The industry is familiar with the costs to maintain a jungle of EDI connections. New technology to help fix this issue, often brings in a “middleman” company, at additional cost and with the risk of a new landscape of multiple connections, a single point of failure and a customer lock-in.

And none of these solutions bring the integral supply chain view that all operators in the FVL segment need. Upstream and downstream visibility to optimise terminal and transport processes, the ability to collaborate and optimise entire networks and visibility of damage events are all aspects of integral supply chain management in our industry.

And this is where blockchain technology can play a differentiating role. This technology is now globally applied in many supply chain industries as it provides a number of key benefits above traditional IT-technology.

Blockchain provides the possibility to share data in a safe process. As data is encrypted and not stored centrally, data is always safe and cannot be seen nor used by third parties. All eco-system partners can exchange data, and by doing so provide information and collaborate.  Communicating over one interface instead of over multiple (EDI) connections.

Information stored in a blockchain network is immutable. Full traceability (auditable track and trace) in the supply chain process from factory to dealer can therefore be provided to OEM’s, dealers, and other stakeholders. Responsibilities are clear, disputes disappear. All paperwork can be digitalised. In the business of used vehicles a contribution to the reduction of (mileage) fraud can be substantial.

Blockchain eliminates the need for a middleman. Everybody on the network can transact with everybody directly. Near-real time information of all activities is available, and supply and demand can be matched much more efficient, reducing empty miles, and creating value for all parties.

This new technology therefore combines the possibility to digitalise all aspects of the FVL supply chain, with the possibility to create an integral view of this supply chain. A supply chain where all eco-system players can collaborate to optimise processes. Capturing value beyond the possibilities of traditional technology and traditional operational processes.

Jon Kuiper

CEO of Vinturas

Vinturas is an initiative of a number of ECG members to provide supply chain visibility for the FVL industry using blockchain technology

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