Samsung, the South Korean multinational conglomerate, which is also world’s largest manufacturer of smartphones and semiconductors, is exploring blockchain technology to improve tracking of their global shipments. Samsung‘s global shipments amount to tens of billions of dollars in a year, and the planned move is thus seen as very important towards the digital transformation journey undertaken by the company.
Shipping could use technology to improve itself. The high amount of paperwork, back and forth communication, close coordination with authorities such as those in port consume both time and money. Shipment transactions, with all their paperwork, go through a long chain of processing steps, involving diverse stakeholders.
Samsung believes blockchain will help, with its promise of decentralization and immutable record. In blockchain, which is a distributed database, nodes, i.e. computers on the network, maintain a shared version of truth without any central server exercising a centralized authority, and each node has the entire information on the blockchain. Updating blockchain, i.e. adding new block records, go through a rigorous process, where the consensus mechanism of blockchain ensures that only the transactions approved by the majority of the participating nodes get recorded on the blockchain, and entire information is secured by cryptography. This makes hacking it economically non-viable. Smart contracts govern the relationship between stakeholders, thereby trust in the system is supplied mathematically, and there is no need to explicitly trust an individual or entity.
While cryptocurrencies such as Bitcoin and Ethereum are the most famous applications of this technology, businesses across verticals are increasingly finding the value of it, due to its promise of simplification, cost reduction, and tamper-proof records.
Samsung SDS, the subsidiary of the Samsung group that provides information technology (IT) services, is responsible for building the blockchain-powered solution to streamline their shipments. Samsung Electronic Co., the most famous of the Samsung lines of business (LOBs) will be the primary user of the system. Samsung‘s expected volume of shipment in 2018 is mind-boggling, and will include 488,000 tons of air cargo, and 1 million 20-foot-equivalent (TEU) shipping units. The shipments will include high value merchandise, for e.g. light-emitting diode (LED) displays, and Galaxy S9 smartphones. The company believes that they will save 20% cost by using blockchain to control this process. For consumers of Samsung products, it will mean shorter time between product launch and its availability in stores.
Samsung, headquartered in Seoul, South Korea, with their planned move to blockchain, conforms with the growing trend of tech giants increasingly exploring this technology. For e.g.:
- IBM is formulating their entry into the crypto space;
- Microsoft is investing in blockchain start-ups through their venture capital (VC) arm;
- Intel plans to use blockchain for genetic sequencing, and has also plans to design hardware specifically catered to crypto mining.