One of the oldest computer giants, IBM, is in the logistics news again after launching a blockchain-based financial services platform for pharmaceutical procurement that the company says will increase efficiency, transparency and operation of supply-chain finance.
Blockchain technology has the potential to reduce transaction costs, eliminate redundancies and increase visibility in supply chains, especially in airfreight, were many companies still use paper to record shipments and transactions.
“Big Blue” developed the platform in conjunction with Hejia, a Chinese supply chain firm and an initial pharmaceutical retailer, a hospital and a bank. Hejia plans to expand the platform to include multiple pharmaceutical retailers, hospitals and banks later this year.
Shen Xiaowei, director of IBM research in China, explained that, “blockchain can fundamentally transform businesses by eliminating inefficiencies, speeding up transactions and enabling innovative new business models.”
China’s underdeveloped credit evaluation and risk control systems make it hard for small- and medium-sized retailers to raise funds. In practice, this means that pharmaceutical retailers often wait up to 90 days to recover payment after delivering medicine to hospitals.
Without sound credit records and collateral to meet financing standards, these retailers often find it difficult to get loans from traditional financial institutions. Blockchain, however, circumvents this logjam by making transactions secure, verifiable and instantaneous.
IBM’s blockchain-based network tracks drugs through the supply chain and encrypts trading records in a virtually unhackable manner. The transparency of the blockchain record verifies the authenticity of the transaction.
Overall, the platform is designed to help to reduce the turnover time of funds on both sides of the supply chain, allowing banks to be more informed so that they can grant access to funding for small- and medium-sized pharma retailers.
Those interested in learning more about airfreight in 2017, should join us at Cargo Facts Asia in Shanghai, 25 – 26 April. To register, or for more information, go to CargoFactsAsia.com