Optimizing finished vehicle logistics with blockchain solutions

When a customer orders a product on an ecommerce site, through quick commerce or through a traditional courier service, they receive an update of each action taken to deliver that product. This includes basic status updates such as shipped, in transit, reached destination, out for delivery and delivered.

Service providers manually update some of these statuses, and some updates are enabled through technology by using devices such as GPS trackers, RFIDs and sensors.

But with all the technological advances in the transportation of goods, one area that lags behind is the automotive logistics industry.

Challenges of finished vehicle logistics

Finished vehicle logistics in the automotive industry typically involves moving vehicles from the assembly plant to the National Sales Organization (NSO), then to dealerships or to large fleet operators. The multimodal transportation is done via road, rail and sea. Several stakeholders and processes are involved as vehicles move from the original equipment manufacturers (OEMs) factory or compound to their customer’s destinations, resulting in a plethora of challenges as listed after this:

• Limited customer visibility of Estimated time of Arrival (ETA): Unlike e-commerce, automotive end customers generally lack visibility into the delivery process after placing an order with the dealer. Customers usually rely on verbal confirmation from the dealer regarding the probable delivery date.
• Lack of route optimization: Delivering vehicles within stipulated timelines while keeping logistics costs low requires route optimization. Logistics service providers (LSPs) do not always take the most optimized route, and unexpected events (such as the Suez Canal blockage and weather impacts) can complicate matters further. Route intelligence is crucial for deciding the best possible route or mode of transportation based on delivery timelines.
• Damage during transit: Many vehicles are damaged during transit each year. Identifying the stakeholder responsible for a particular damage leads to accountability and timely resolution. Indirect implications include extra logistics and handling costs to manage the damaged vehicles. 
• Insurance claims management: OEMs must file insurance claims in case of damages, which involves providing relevant documentation and capturing evidence of activities as the vehicle changes custody among stakeholders.
• Liability for damages: Identifying the party responsible for any damage during transit is important to fix liability.
• Delivery delays: Transit damages can delay delivery to customers. Proper evaluation of the vehicle’s condition is necessary to decide whether it can be delivered or if a new vehicle must be ordered.
• OEM losses: OEMs suffer both reputational and monetary losses due to damages during transit.

Building collaborative stakeholder networks for digital transformation

A blockchain-based automotive logistics platform can address the issues associated with finished vehicle logistics. Stakeholders on the blockchain platform can collaborate to track and trace where a vehicle is located at any specific point in time. They can also connect any relevant document to a vehicle, and upload or retrieve documentation and events of the vehicle throughout its journey in the supply chain.

The solution can provide near real-time actionable supply chain information for all contributors in the network (including OEMs, LSPs, warehouse operators, compounds, dealers and insurers). These network contributors collectively generate value by analyzing various factors, such as production locations and target markets and determine the most efficient and cost-effective routes.

Real-time actionable insights can include vehicle registration, creation of transport orders, warehouse orders, instructions that LSPs provide to sub-contractors among others. They can also encompass consignment notes, SalesOrder and events related to transport such as pickup or drop off. Further aspects include warehouse events such as gate-in, gate-out, ready for pickup, commercial events and damage events like submission of damage events, damage reports or cost estimates for damage.

Using insights to optimize, track and protect the transportation process

Stakeholders can tie these insights to documents associated with the shipping, such as contractual documents, bill of lading, inspection reports and various other evidence to fix liabilities in case of damage. Digitizing customs documents and tying them to a single source (such as a vehicle) expedites the custom clearance process and can reduce the delivery timelines.

The blockchain-based solution makes it possible to calculate ETA with real-time actionable insights from multiple stakeholders. This can be done by factoring in vehicle location, traffic, historical data, weather conditions, vehicle and driver performance, distance and speed calculations, and any other available. Vehicle tracking is possible through various technologies such as GPS, IoT sensors and RFID and telematics.

OEMs and LSPs can optimize the transportation process by planning the movement of the vehicles from manufacturing plants to various markets to meet delivery schedules and cost requirements.

LSPs can adjust the routes based on the trade lanes and the associated transportation legs in the case of any route deviations due to external factors. These external factors include adverse weather conditions, traffic conditions, political or social unrest, infrastructure issues or any other supply chain disruptions. Pre-defined trade lanes can help in identifying the next best route that is available from the current location in case of disruptions.

LSPs can inform truck drivers and other personnel of their responsibility to inspect and report the vehicle status before loading, during transit and upon delivery. Inspection reports document the condition of the vehicle to identify when and where damages occurred.

They can provide photographic evidence in case of any damage in real time. Users can store and publish evidence over a blockchain network for transparency across all involved stakeholders. This gives the insurer solid, accurate evidence.

Bringing the blockchain solution to life

Blockchain satisfies the key requirements of transparency and data sharing among stakeholders. Blockchain’s distributed ledger technology allows network participants to create a single source of truth for everything that happens to a vehicle throughout the supply chain, and that data is immutable.

Car buyers know exactly where their car is in the delivery cycle. OEMs can assess progress and act in case of any financial or operational challenge. Meanwhile, LSPs optimize routes, reduce customs clearance times, and increase efficiency and accuracy. Dealers plan vehicle inventories to meet customer needs, and insurers accurately assess claims and the extent of damage, leading to faster settlement and a reduction in fraudulent claims.

The blockchain solution builds an ecosystem that is accessible to all the players in the finished vehicles logistics space. Because of the integrity and security that blockchain provides, partners can work collectively to provide end-to-end visibility to the automotive logistics industry.

Source: ibm.com