John Monarch knows logistics. His South Carolina based company, Direct Outbound, has been running warehouse and fulfillment services since 2012. Managing the shipments of e-commerce and brick and mortar retailers on a daily basis, he’s acquired a deep familiarity with the global supply chain, and the nature of world commerce more broadly speaking.
Incorporating Smart Contracts on the Supply Chain
It was this experience with the supply chain that led Monarch to his next venture, ShipChain. Designed to take the transport industry into the modern age, ShipChain’s platform utilizes the Ethereum blockchain, with an Erc-20 token as a method of exchange.
The platform incorporates unified track and trace, reputation and reward systems, smart contracts for handoffs between parties along the supply chain (with the records stored on the blockchain after execution), and an API architecture third parties can use to modify tracking devices and smart contracts to suit their own needs.
As Monarch tells it, the supply chain is something of a hodgepodge. A single transaction sometimes takes ten companies from warehouse to doorstep. There’s no unified system of record keeping between carriers, some of whom even forge their records on purpose to avoid blame for a damaged or lost package.
Brokers charge high fees to coordinate shipments, but offer no transparency to the customer. Entry costs are sky high for newcomers to the industry. A significant part of Monarch’s mission is to improve conditions for the small to midsize businesses (SMBs) that suffer these inefficiencies most acutely.
ShipChain’s Web Platform
Part of ShipChain’s blockchain-based business model is their web booking platform. Right away this lowers the barrier for entry by presenting an easy-to-use, familiar graphical interface for SMBs. Shippers, those selling a product, can connect seamlessly with carriers, those moving the product to its destination.
This does away with the brokerage model that has been a critical component of the transport industry from the beginning, and the main reason why costs are so exorbitant, especially for a small business just entering the market. A base percentage fee will be charged on each transaction to fund the platform, but it will be vastly lower than the 30 percent levied by brokers.
Middlemen rarely reveal any justification for the price charged by the carrier, raising the possibility it could artificially be inflated. ShipChain, on the other hand, lists the carrier’s prices in a clear and transparent fashion. Thus, SMBs will pay lower costs to move their product without fear of being secretly overcharged.
Track and Trace Accountability
As mentioned, the supply chain contains multitudes. As it wends its way across the globe, a package passes through many hands. Depending on who’s doing the handling, record keeping standards can vary wildly.
At best one can expect a detailed digital spreadsheet, at worst, hand-scrawled notes, or even verbal messages. This opens the door for fraud and unfettered negligence.
ShipChain solves for this by using smart contracts on their blockchain platform. Payment is held in escrow until certain conditions are met which execute the contracts and release the funds. Conditions include safe delivery of goods, on-time delivery, and other requirements agreed upon by shipper and carrier.
If a package is damaged in transit, the blame lies with its last holder, and funds will be deducted from the amount in escrow accordingly.
In an industry where $30 billion in goods is lost every year, instant, secure track and track via the blockchain is a game-changer, especially for SMBs that can ill afford any increase to their overhead.
ShipChain’s web booking platform also offers 24/7 customer service, another incentive for SMBs to come on board. Under the current supply chain, it’s practically impossible for a shipper to find out where their package is on the supply chain or its current condition. Considering it can take days or weeks for goods to make their way across the world, that’s a lot of radio silence, and a lot of unnecessary stress.
Thanks to the above mentioned, ShipChain can communicate all the necessary data on a shipment at any time through their web platform. If that fails or doesn’t satisfy the customer’s needs, the customer service is there to provide answers. John Monarch is well-versed in this business, too. Direct Outbound, in addition to warehousing and fulfillment services, also maintains a call center based in their Greenville South Carolina location.
This holistic approach to business serves the customer well. Not only is there only one point of contact one needs to worry about, as opposed to a tangle of outsourced and subcontracted entities, but the amount of time between problem and resolution is narrowed considerably. And as employees of ShipChain, those manning the customer service desks are more familiar with the company than outsiders could ever be.
While ShipChain does offer enterprise-level solutions as part of its business model, Monarch has no interest in leaving the little guy behind. When ShipChain’s platform launches, it won’t be a surprise if the very first adopters are small and medium-sized businesses. In many ways, Monarch’s company is precisely what they’ve been waiting for.
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