Supply Meets NFT Demand: How Logistics Can Speed Up Shipping with NFTs
Find out how logistics companies are using NFTs to “get ahead” of the rising demands of the global consumer market – whilst also reducing costs and risks.
There’s more to NFTs than digital art. Because of how popular they are in the art world, NFTs often get overlooked for their technological value. While some NFTs fetch millions of dollars for art, some are solving million-dollar problems in logistics.
In recent years, the world saw how disruptive the COVID-19 pandemic was for the logistics industry. Companies saw massive shipping delays and cancellations as well as businesses (buyers) shutting down. Not to mention, political conflicts in Europe and hyper-volatile financial markets in the west.
Yet even with these hurdles, the industry might expect double the demand for shipping in the next five years. So, it isn’t a question of demand. But rather, can supply keep up with the demand?
How NFTs Can Help Supply Chains
Consumer fraud, inefficient supply chain management, and rising costs are some of the biggest problems in logistics that’s pushing back the industry’s capacity to supply global demand.
One in every ten branded products is likely to be a counterfeit. After two years, supply chains might only get back to normal by early 2023. And, besides the pandemic, a lack of effective planning strategies is driving costs up for the industry. It’s a bit of a mess. For an industry like logistics, “a bit of a mess” is not assuring at all.
However, emerging blockchain technology in the form of NFTs has the ability to solve these very problems and more. But since it is relatively new, only a few businesses can see and understand its potential.
For those of you who don’t know what NFTs are, they are basically digital certificates of ownership recorded in an unchangeable public ledger called the blockchain.
An NFT or non-fungible token is immutable and interoperable. Unless you’re a Bond villain that can shut off the Internet or global power grids, they are almost impossible to delete, change, or duplicate. They can be publicly viewed on any node of the blockchain it uses because network participants have the same copy of the ledger, reducing the risks of fraud in the process.
Digital tokenization can exist forever as long as the blockchain exists as well. Each NFT is unique and can be updated in real-time. Making it possible to attach unique digital identities to specific products.
Corporations can use them to record entire supply chains, product batches, individual products, and third-party transactions.
The good news is that many corporations including industry giants are already using NFTs and the blockchain to optimize their supply chains. It has also been beneficial for trading partners, third-party logistics providers, and suppliers when it comes to collaboration and data sharing.
Without further ado, let’s check out eight real-world use cases of NFTs in the world of supply chains, shipping, and logistics:
8 NFT Use Cases For Supply Chains
- Product authentication
- Real-time product traceability
- Equipment issue history
- Responsibility for asset
- Increased data security
- Unique digital business documents
1 Next Level Product Authentication
“Abibas”. “Rolax”. “KatKot”. Sound familiar? That’s because these are misspelled names of popular brands that illegal counterfeiters use to sell $600bn worth of fake branded goods per year. Consumer fraud is the bane of almost every supply chain. In the last two decades, the market for counterfeit products is estimated to have ballooned 100 times more.
Now more than ever, ever-expanding supply chains will need a more effective and foolproof way to authenticate products. NFT technology might be that much-needed solution.
NFTs can track the production, distribution, and purchase of consumer goods. They can be used to track and verify usually counterfeited products like food, prescription drugs, clothing, jewelry, and footwear, among many others. In logistics, these tokens can be used to authenticate the provenance and originality of goods.
Global logistics & supply chain companies like Maersk are using the same blockchain technology NFTs are built on to track their shipments out on the ocean since 2018. By taking their current system to the next level with NFTs, they can track everything from shipments to every single product they have on board.
In application, businesses can use and mint NFTs to attach ‘digital twin’ identities for each product or batch.
From the very start of the supply chain, each product gets linked to NFTs that serve as their unique digital identifiers. With every process that it goes through, it will get updates appended to its attributed digital tokens.
Each time a consumer receives the product, they get an accompanying NFT for authentication. To attach NFTs on physical products, all manufacturing companies have to do is print a QR code or barcode on the product’s outside or inside the packaging.
Consumers can either scan one of these codes to access the product’s NFT. By the time it reaches the customer, they can use the NFT to view information such as materials or ingredients used, storage locations, and time in transit.
This way they can prove if the product really comes from the supposed manufacturing brand including where and what batch it came from.
Digital tokens also help manufacturers gain a new level of transparency by tracking their production processes and sales funnels. This not only reduces the risk of counterfeits but also helps them find their most and least efficient processes and improve on them. (More on this later!)
2 More Transparent and Efficient Tracking
Earlier, besides authentication, we also touched on how using NFTs for tracking products can make supply chains more transparent and efficient.
Getting full visibility of day-to-day production and logistics processes is vital to every supply chain, especially when it comes to perishable goods such as food, fragile products such as pharmaceutical drugs, and reactive materials such as petroleum.
As of now, logistics is dependent on globalization. After going through countless third-party outsourcers, businesses eventually lose track of where product components and the products themselves come from. Typically, it takes more than six months until a product reaches and gets sold on the retail market.
First of all, businesses can use NFTs to track packages. It can be as simple as scanning products after each process in the supply chain and recording the new handler or owner of the product on the blockchain in real-time.
Besides packages and goods, NFTs can also help track packaging and expensive materials. Logistics companies can use NFTs for their packaging materials as well as they do with what they use for their products.
This is especially helpful when the company uses reusable packaging. It also helps companies keep track of expensive and hard-to-source materials such as rare metals, electronics, and seasonal ingredients such as produce and even caviar.
Most of all, NFTs can help supply chain inventories improve inventory management. With transactions and processes recorded in real-time, there will be a lesser need to check stocks, input, and output.
Many industries that heavily rely on logistics already are using NFTs for the exact same uses here or similar. One great example is the pharmaceutical industry where some companies are currently using NFT tech to verify the authenticity of drugs and track their manufacturing history.
Read more: 8 NFT Use Cases That Can Fix Healthcare’s Big Data Issue
Amazon is also one of the many companies using blockchain technology for supply chains to reduce fraud and counterfeits on their platform. If they add NFTs to the mix, they can potentially reduce it even further and manage transactions down at the micro-level. Since they are already using the blockchain, adoption might not be a problem.
3 Easier Troubleshooting
Products aren’t the only things companies can track with NFTs. Tokenization is also beneficial for improving the efficiency, safety, and reliability of business processes.
Another major use for NFTs in the logistics and shipping industry is recording changes, errors, and repairs on supply chain equipment. Most of the time, it takes a specialist or expert to diagnose a supply chain problem. This both takes time and money, especially if the company doesn’t have one in-house and they have to come over miles away.
Even after the specialist comes on board, sometimes a historical record of all the issues and repairs made to the equipment can help expedite the process. This way the specialist can take a more informed approach to solve the problem.
Although once they’ve fixed the problem, businesses usually don’t have a documented reference for understanding what went wrong and how they fix it.
So what if a similar problem happens again and you can’t get the same person to fix the problem, does the next specialist have to start all over again? What if they had records that can help them fix the issue faster and more accurately?
By using NFTs to track supply chain activity, businesses can identify and address unwanted changes in the current supply chain. They can attach these records to the digital identity of their equipment. Whenever someone wants to take a look at the equipment, they can already start diagnosing it just by looking at its digital equivalent.
Using NFTs will reduce losses and damages previously unseen by standard tracking methods. Although as a technology it is still pretty new and unconventional. Fortunately, leading developers and platforms have made it easy for companies to adopt NFT tech at the enterprise level even as newcomers.
4 Securing Responsibility and Accountability for Assets
Beyond the confines of a business's supply chain, NFTs can also be used for working together with trading partners and third parties.
In a typical supply chain, products go through different processes as well as different entities like distributors, customs, and the manufacturers themselves.
Yet when something goes wrong during the entire process, it can be hard to figure out who’s responsible. This can lead to disparities between formerly effective partnerships or expensive and time-consuming reviews or investigations.
By using NFTs, everyone involved in the process can identify not only who is responsible for each process but also which entity is currently in control of the product. If all involved parties acknowledge the benefits of NFTs, they have to enter a liability agreement.
Before receiving a batch of products, the receiving party can look into a product’s NFT. Similarly, the sender party won’t turn over the goods to the receiving party if they haven’t received an NFT for the product.
In essence, integrating NFT technology in supply chain management gives the industry a new degree of interoperability, transparency, and accountability that makes both transferring data and products between parties more efficient.
5 Speed Up Supplier Onboarding
With newfound interoperability and efficiency, businesses will also be able to expedite their processes, especially supplier onboarding. NFTs can reduce the cost of acquiring and purchasing operating goods and services. Product order errors, inaccurate risk assessments, and lack of overall reliable supplier onboarding data cost businesses roughly $15 million every year.
Supply chain management can take advantage of the blockchain’s immutable ledger through NFTs to reduce or eliminate inaccurate information exchange for all parties involved in the supply chain. From identifying and evaluating suppliers to managing contracts and payments, NFTs can simplify procurement processes by creating open channels to exchange information with ease. Not to mention, they can reduce the risk of inconsistencies because of their unchangeability.
In 2019, IBM used blockchain technology to onboard new suppliers 70% to 80% faster than they ever did before. Including a potential reduction of half of their administrative costs. By using the blockchain, IBM onboarded suppliers almost two times faster while also halving their costs.
Built on the same technology, NFTs can help businesses find and onboard low-risk suppliers faster at a lesser cost. In combination with the use cases we’ve gone over above, they can help businesses predict and mitigate risks, and work with suppliers that fit their needs.
6 Strengthen Data Security and Sharing
Data is a key determinant for smooth collaboration. Through NFT technology, businesses can secure their data and share them through secure channels on the blockchain.
They can take advantage of NFT technology for data sharing to boost shipping and production speeds. Data is rarely disclosed and shared by companies because of its sensitive nature.
However, sharing data is also necessary for entities and shareholders who run the supply chain as well as third parties who need the information to ease collaboration.
With NFTs, businesses can control data access and manage who gets access to specific data only.
Let’s say, for example, Apple aims to be more transparent with its customer base and production rate data. But, at the same time, they want to respect their end customers’ data privacy.
They can mint NFTs in a way where they set specific data restrictions that allow company shareholders and investors to view where most of the products are sold and how fast device manufacturing rates are without divulging their users’ personal information. All done without supervision.
Because through NFTs companies will no longer have to set up the restrictions themselves when it is already pre-specified for each device made.
7 Foolproofing Business Documents
The need for authenticity for logistics doesn’t only exist because of counterfeit products. Business documents such as registrations, certifications, licenses, invoices, and orders are also frequently fabricated by bad actors within and outside companies.
Faked documents contribute to the continued rise of unlawful operations, fraud, and of course, more counterfeit products. NFTs can be used to authenticate these documents and make them incredibly hard to edit and fake.
By attaching unique digital identities to each document, NFTs will make it easier for authorities and law enforcement to launch a crackdown on illegal supply chain activity.
Legitimate businesses will also benefit from the use of NFTs for authenticating documents in defending the legitimacy of their business and reducing illegal competitors and imitators.
8 Warehousing Support
Warehousing is a necessary yet costly expense for suppliers, manufacturers, exporters, and importers. Without the right system for it, product storage and handling may cause pricey damages or delays.
With NFTs, businesses can use the tokenized digital identities of the stored products to organize and speed up the ins and outs of the warehousing process. NFT technology gives businesses the ability to see both the big picture of their supply chain and minute details in each transaction.
Because of blockchain’s inherent features, NFTs reduce the risk of duplicating, overwriting or deleting data. Tokenized digital identities will make it easy and quick to retrace and identify processes and products in the supply chain.
For example, if each mobile device has its own digital identity, manufacturers and warehouse management can easily locate when and where entire batches of mobile devices are without manually updating the database.
Getting Ahead With NFTs
Manufacturing and logistics companies can use NFT technology to take control of their current supply chain processes. It can help them identify problems on the spot, bring down recalls, and optimize processes that can save costs by the thousands and millions.
Through tokenization, they can diagnose and fix problems faster in real-time. Even out in the oceans or flying high in the clouds, companies will need to be more than ready to face the unpredictability of shipping delays and supply chain accidents.
More so, product tampering and counterfeiting are also less likely to happen even when NFTs are digital.
Using NFTs can help small to medium corporations simplify and scale their operations at a multinational scale. Admittedly, NFTs can be pretty complex and intimidating for logistics and shipping business owners new to the blockchain. But lately, it only got easier to get started, especially with the advent of gas-free minting.
As demand and product journeys expand, the need for wide-scale supply chain visibility increases. To speed up shipping speeds and revive normal capacity, the industry might have to take advantage of fast-growing innovative technologies such as NFTs.
Explore more real-world NFT use cases in your industry. Send us a message to discover how to use NFTs to scale your business.