Final report project digital transformation of logistics with ai and blockchain

Besides, it also points out achievements, limitations and policy implications in data security management, thereby proposing some appropriate solutions in the process of promoting digita

MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY

DIGITAL TRANSFORMATION OF LOGISTICS WITH AI AND BLOCKCHAIN

Pham Kim Tuyen 22132191

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I INTRODUCTION 1

II LITERATURE REVIEW 3

1 What is digital transformation? 3

2 Role of digital transformation ( role for business) 3

9 What is the role of AI, blockchain for logistics? 9

10 Digital Transformation with AI for logistics 10

11 Digital Transformation with blockchain for logistics 10

12 Data security management policy 11

DIGITAL TRANSFORMATION OF LOGISTICS WITH AI AND BLOCKCHAIN

Minh-Truyen Truong, Ngoc-Bao-Han Nguyen, Thi-Tu-Quyen Le, Vo-Hoang-Tu Truong, Ngoc-Kim-Truc Nguyen, Kim-Tuyen Pham.

Faculty of Economics

HCMC University of Technology and Education Ho Chi Minh City, Vietnam

Abstract: Logistics is considered a key economic sector of many countries around the world Has a strong impact on the production, distribution, transportation and supply of products In the context of integrating the digital economy with the explosion of the 4.0 industrial revolution, the logistics industry must truly grasp new technologies to improve performance and quality The article explores the impacts and factors affecting digital transformation in AI and Blockchain technology in logistics businesses globally AI's ability to mine data from Blockchain helps make more optimal decisions On the contrary, the high security of Blockchain is a solid foundation for AI Besides, it also points out achievements, limitations and policy implications in data security management, thereby proposing some appropriate solutions in the process of promoting digital transformation in the industry.

Keywords: Digital Transformation , Logistics, AI, Blockchain I INTRODUCTION

The breakthrough of the industrial revolution has contributed to transformation not only in the field of technology but also in fields such as economics, production and society Since the beginning of 2000, when the 4.0 industrial revolution took place, the fields of technology and engineering have entered an era of breakthroughs and the trend of smart development If in the three industrial revolutions before stopping at human life's development relied on developing machines to do labor for humans, then the 4.0

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industrial revolution, intellect was used in all activities The engine and machine will replace this activity Technology supporting digital transformation is increasingly participating in all activities of life, in all fields, digital transformation technology is constantly encroaching and gradually becoming one of the technologies supporting activities in production, economically and socially in the most effective way The powerful events of the 4.0 industrial revolution have truly changed people's lives and their certainty has a particularly strong impact on economic development in all over the world In recent years, Logistics is an industry that has received special attention because of its importance Logistics contributes significantly to the development of the economy Although it is a late-developing industry, Logistics quickly becomes a key industry in developing the economy The operations of logistics service providers are based on the quality of logistics services and available information system capacity (Sheikh & Rana, 2011) Currently, most leading companies in the logistics industry still rely on EDI or APIS (Nguyen Thanh Van, 2022), which are systems used to ensure data security and increase functionality industry security However,there are several of mistakes need to be fixed, AI and Blockchain are the most effective solution Blockchain is the system that allows information or data to be transmitted safely, the Blockchain process is intricate, the process of Blockchain creates the trail to manange every activity of the organization so it is unable to make any mistake (Nguyen Thanh Van, 2022) The fewer mistake are made, the more effective of result As an important and highly flexible industry, Logistics needs to follow the 4.0 industrial revolution as much as possible to promptly apply emerging technologies in the digital transformation period to transportation activities, logistics and supply If we know how to emerging technologies are properly applied to work, Logistics will not only find new directions in developing the industry's flexibility but can also find answers to cost and optimization problems profits and other costs, improving flexibility and promoting the quality of future industry development thanks to digital technology Realizing the importance and urgency of applying new types of technology to the Logistics industry and the potential of this application Our team decided to choose the

topic "Digital transformation technology of the Logistics with AI and Blockchain" as a research topic with the desire to propose a reasonable solution to this problem.

The contributions of this study are as follows:

Apply text mining methods for analysis focusing on AI and Blockchain for deployment in the logistics field.

Identify key themes and factors related to the use of AI and Blockchain in logistics through text mining analysis.

Provide implications and suggestions to improve the efficiency of using AI and Blockchain in logistics operations

The remaining sections of the study are organized as follows:

In Section 2, an overview of theories related to AI and Blockchain in logistics will be presented In Section 3, proposes research methods including text mining methods and recommendations Section 4, presents the experimental results Section 5, concludes the article.

II LITERATURE REVIEW

1 What is digital transformation?.

Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing market demands and empower employees to become more productive and agile It is about fundamentally changing how a company operates and delivers value to customers, employees, and other stakeholders.

2 Role of digital transformation ( role for business).

Digital transformation is pivotal for the modernization and success of businesses in an ever-evolving, tech-centric landscape It signifies a profound change in corporate

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minimizing risks, ensuring trust, safety, and efficiency in money, finance, property, and other transactions etc.

It can be said that Blockchain is not an outstanding technology, Blockchain can compete with traditional business models because it is faster and more cost-effective The current economy and society are built on the foundation of Blockchain Despite its massive impact, it will take time for blockchain to penetrate our economic and social infrastructure The penetration process will take place little by little and steadily, not suddenly even though technological and institutional trends are developing dramatically (Dobrovnik et al., 2018) Yli-Huumo et al (2016) argue that the future research directions for blockchain are not clear We may consider blockchain as a new paradigm, which is a decentralised network for supply chain integration and collaboration beyond currency, payment, and economics.

8 Blockchain characteristics.

Decentralization: Blockchain is completely different from the traditional internet network, where every computer connects to a central server For Blockchain, each system can access any data without going through a central server The consensus mechanism in Blockchain has the function of controlling the network Each node has an updated copy of data and execution power instead of only the server having control (FUNIX, 2022).

Security and reliability: Blockchain helps secure network information safely and reliably using the principle of symmetric encryption The data encryption and decryption sequence is created using an encryption algorithm In addition, Blockchain also uses technical designs such as time-chain certification and consensus mechanisms to ensure that data is not manipulated (Loaf, 2022).

Expansibility: Thanks to Blockchain, the underlying open source technology, developers can create decentralized applications to serve a variety of use cases The smart contract self-evaluates the conditions for nodes to complete the contract In the absence of

supervision, Blockchain can help complete contracts efficiently, orderly, and reduce costs (Jones et al., 2019).

Traceability: By using timestamp technology, the Blockchain system stores information about the time dimension in the process of expanding data information After new block containing data information on P2P network is produced, it will be time stamped and connected in chronological order to form a block, the block's data cannot be tampered with (Liu et al., 2022).

9 What is the role of AI, blockchain for logistics? Role of AI:

Optimizing routes and schedulez: AI-powered algorithms can analyze vast amounts of data, such as traffic patterns, weather conditions, and customer demand, to optimize delivery routes and schedules This can help to reduce costs, improve efficiency, and ensure timely deliveries.

Predicting demand and inventory levels: AI is being used to predict demand more accurately than ever, which can help logistics companies make informed decisions, especially in demand planning AI can be used to predict demand for goods, which can help businesses to optimize their inventory levels This can help to prevent stockouts and overstocking, which can both be costly.

Automating tasks: AI-driven automation can also deliver significant gains by automating multiple tasks across the value chain, improving accuracy, decreasing costs, and making scheduling, routing, and delivery more efficient.

Improving safety: AI-powered systems can be used to monitor warehouses and transportation networks for safety hazards This can help to prevent accidents and injuries AI can also be employed to improve customer service by providing personalized recommendations and swiftly resolving issues (Dhiraj et al., 2023)

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Role of Blockchain:

Blockchain is being used to track the provenance of goods, ensuring that products are ethically sourced and that supply chain operations are environmentally sustainable Logistics companies can eliminate intermediaries and streamline the supply chain, resulting in faster and more cost-effective transactions Additionally, the technology can help to improve inventory management, reduce shipping times, and enhance supply chain efficiency (Dhiraj et al., 2023).

10 Digital Transformation with AI for logistics.

In the logistics industry, AI has been identified as a key technology that can help organizations improve their supply chain and logistics capacity

Enhanced Planning and Optimization:

● Machine learning solutions can facilitate planning activities, AI-powered demand forecasting methods

● AI can help businesses analyze demand in real-time, allowing organizations to dynamically update their supply planning parameters and optimize supply chain flow

Automated Operations:

● Warehouse automation: AI-powered robots and autonomous guided vehicles (AGVs)

● Damage detection / Visual Inspection by Computer vision technology

● Predictive maintenance: Predicting potential machine failures in the factory by analyzing real-time data collected from IoT sensors in machines.

● Self-driving vehicles

● Delivery drones

Predictive analytics:

● Dynamic pricing: to analyze customers’ historical data in real-time so that it can respond to demand fluctuations faster by adjusting prices.

● Route optimization / Freight management: Route optimization uses shortest-path algorithms in graph analytics discipline to identify the most efficient route for logistics trucks.

In addition: Automating document processing, automating other manual office tasks

11 Digital Transformation with blockchain for logistics.

According to Sergeyev V.I and Kokurin D.I., “blockchain is an innovative paradigm for coordinating any type of activity, including inter-organizational coordination of supply chain participants” The logistics industry has been undergoing a digital transformation with the help of blockchain technology Blockchain provides streamlined delivery processes, improved inventory management, and supply chain traceability and transparency The combination of blockchain technology with IoT elements in logistics and transportation contributes to business process optimization and significant financial savings Blockchain can help track international shipments more effectively, reduce administrative tasks by automating the documentation process, and protect transactions across the entire logistics chain.

12 Data security management policy.

A data security management policy is an essential component in the logistics and supply chain industry that guarantees the privacy, availability, and integrity of data The logistics sector is going through a digital transformation, introducing "smart" trucks,

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ships, and warehouses The Internet of Things (IoT), a massive network of interconnected devices, is connected to all of this technology.

Data security: Only gather and keep the bare minimum of information required for justifiable business needs It is the responsibility of all parties involved in the logistics sector to safeguard the private information of their clients, associates, and workers To prevent unauthorized access or identity theft, the data gathered from IoT devices should be secured by installing a strong firewall and changing the password on a regular basis.

Data access control: Establish access controls to make sure that only individuals with permission can access data.

Data encryption: Encrypt sensitive data in transit and at rest.

Data security incident response: Create and carry out a thorough plan for handling data security incidents According to DHL Logistics of Things (2019), the strategy should outline how to handle a data breach, including who will be in charge, how to get in touch with stakeholders, and how to recover from the incident1.

Vendor risk management (VRM) systems: All agreed-upon behaviors, access, and regulations between an organization and its third-party vendors should be included in a vendor risk management plan The plan should include details about testing and assurance required to prove that the third-party service provider can do its job2.

Employee training: To limit the risk of exposure to information , employees need to be trained in identifying issues, protecting sensitive information, and mitigating the chances of criminals accessing personal information and accounts.3

Implement a continuous improvement program: This program should comprise an evaluation of your company's security posture and frequent reviews of your data security policies and procedures Any security lapses in.

your company's posture should be found during the assessment, along with suggestions on how to fix them.

III METHODOLOGY

● Method Data set description

We collect data in the abstract and introduction sections of previous scientific research articles The number of research articles collected is about 200 in the last 3 years Keywords mainly used in the article to access data: Digital Transformation , Logistics, AI, Blockchain

● Text mining method

We use VOSviewer software to mine data from text to visualize word clouds with the occurrence of terms extracted from the main text dataset from which to analyze, identify frequency of occurrence and related phrases to determine the relationship between terms and their mutual influence Then record and visualize the analysis results The algorithm is:

Step 1: Build analytical data sets.

Collect data from scientific research articles, press publications, and official scientific websites Convert data to File txt created by Microsoft Notepad, then put the data into VOSviewer software.

Step 2: Mapping techniques

Establish relationships such as bibliographic linkage, appearance, co-authorship Choose visualizations such as overlay visualizations, density visualizations, shape colors, and locations of items and links on the map Use the zoom and scroll functions to examine the map in detail.

Step 3: Interpret and analyze results.

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Analysis basic information about items and links by moving the mouse pointer over them Use search, filter, and grouping functions to focus on important parts of the map Visually represent results as text files for use in reports or presentations.

IV EXPERIMENTAL RESULTS.

Figure 1 Result of text mining.

(Source: VOSviewer analysis results)

In document measurement research, locating topics or mapping topics is very necessary Besides, keywords are a crucial component of research articles A thorough analysis of keywords within a field can shed light on trends in development and the distinctions between studies conducted in that The strength of relationships between various keywords in a large number of documents is frequently ascertained through the application of keyword co-occurrence analysis We can gain a clear understanding of the internal relationships and structures within a particular academic field, as well as the boundaries of that field's research, by examining the co-occurrence relationships of keywords.

By using VOS viewer - data visualization software, we can analyze overall digital transformation data in the field of logistics with AI and Blockchain collected through more than 180 research articles The software will display related keywords in all documents on a visual grid Network nodes appear, one at a timerepresents a keyword, the size of the button indicates the number of occurrences of the keyword, the larger the sizedemonstrates that the term is commonly used.The link between two nodes represents the relationship between those two keywords and thicker network links show clearer connections than thinner links.

Figure 2 Model text mining of the occurrence density of keywords (Source: VOSviewer analysis results)

Research on digital transformation of logistics with AI and Blockchain has generally formed 4 different color clusters, between these color clusters there is a correlation between keywords in each cluster Based on analysis of the VOS application, we see that there are 4 main factors affecting the digital transformation of logistics: technology, logistics, supply chain, blockchain corresponding to the great circles of the

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blue, green and yellow color clusters In addition, there are other factors such as development, change, impact, digital technology in the red cluster.

Keywords appear a lot from research reports on the internet focusing mainly on topics such as technology, blockchain, logistics, supply chain, digital transformation, artificial intelligence This shows that AI (artificial intelligence) and blockchain are playing an important role in digital transformation of logistics, large and small businesses in this field tend to use AI and Blockchain to optimize efficiency and reduce costs for their own logistics activities

● Analysis by color:

Figure 3 Results for cluster Green.

(Source: VOSviewer analysis results)

Green includes 20 projects: supply chain, management, artificial intelligence, advantage, business model, consumer, customer, delivery, digital supply chain, ecosystem,

flexibility, fourth industrial revolution, manufacturers, production, new technology, opportunities, quality, relationships, suppliers, warehouse.

Keywords in this green group focus on keywords related to the supply chain: management, customers, delivery, ecosystem, supplier manufacturers, warehouses As well as other issues Other related topics are being developed strongly in today's digital era such as: artificial intelligence, industrial revolution, new technologies

The green network is quite dense and tightly interconnected In which the "supply chain" factor is the largest, followed by the "management" factor and "artificial intelligence" factor, the remaining factors are quite small in size The “green” cluster has the second largest network of the three clusters (20 items) but the size of the small and medium-sized network nodes shows that the terms are still not really popular.

Logistics is an extremely important part of the supply chain goods flow The flow of goods begins with the procurement of raw materials, then goes through the production process, followed by packaging, storage, distribution, and delivery to customers and final consumers The fourth industrial revolution is characterized by the convergence of groundbreaking new technologies – such as advanced robotics, artificial intelligence, internet of things, virtual and augmented reality, wearables and additive manufacturing – are transforming production processes and business models across various industries, including logistics Digital transformation in the context of the 4.0 industrial revolution has resulted in flexibility in space and time, while promoting huge changes in the supply chain and value chain in the future Besides, the technology ecosystem collaborates with vendors, suppliers, customers and related industries to create the latest capabilities, provide access to rich data sets and create opportunities to innovate together (Collection Performance; WEF, 2017).

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Figure 4 Results for cluster Blue.

(Source: VOSviewer analysis results)

The blue network includes logistics, technology, blockchain technology, strategy, transportation, operation and other projects Related to logistics themes, the network is quite dense and interconnected This network is no less important as it contains 14 items, among them, the "technology" factor is the largest, followed by the "blockchain technology" factor, followed by the "strategy" factor and the "operation" factor quite equal, and the other factors are relatively small The integration of blockchain technology is driving significant digital transformation in logistics, leading to numerous benefits: increased efficiency and productivity, reduced costs and improved profitability, enhanced transparency and accountability, improved security and trust, greater agility and adaptability etc At the same time, Digital transformation and blockchain technology are driving significant advancements in the logistics industry However, both technologies come with inherent “risk” and “good” factors that impact their adoption and success.

Figure 5 Results of the yellow cluster.

(Source: VOSviewer analysis results)

The yellow network includes Blockchain, security, applications, data, solutions and other projects around the use of Blockchain in the digital transformation of the Logistics industry Regarding the yellow topic cluster, the network is quite dense and

factor, and the

have a relatively small proportion The "golden" network ranks 4th in the largest clusters because it contains 7 projects (ranked 4th), showing that Blockchain is commonly used in digital transformation in the logistics industry Blockchain application in the Logistics

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industry helps improve productivity, enhance security, increase efficiency in transportation and reduce resource costs In addition, projects in the Blockchain linkage network in the Logistics industry with elements such as "data", "relationship", "supply chain", "consumer" show that Blockchain has many opportunities and advantage in this field.

Figure 6 Results of the red cluster.

(Source: VOSviewer analysis results)

The red network includes logistics, economics, transportation, markets, cloud computing and many other projects in the major field of digital transformation Accordingly, the largest factor is the "digital transformation" factor, followed by the "development" factor, followed by the "impact" factor and other factors that are relatively average and small The "Red" network is the largest with 23 projects, thereby showing that digital transformation has a great impact on the field in general and logistics in particular Deploying digital transformation can bring many benefits to businesses,

because it is applied in many different fields such as cloud computing, internet, logistics industry, transport, digital technology, communication technology, information technology In addition, Digital transformation also impacts the business model (and vice versa) and the economy Besides, through the digital transformation network affecting logistics, the elements "development", "impact", "growth", "change", "innovation" can be expressed, showing that digital transformation has a great influence on Logistics has great potential for development but also has certain challenges ● Analysis by link:

Figure 7 Results for Supply chain link.

(Source: VOSviewer analysis results)

Supply chain – Technology link: Driving Efficiency and Innovation Technology plays a vital role in optimizing processes of suppy chain, driving efficiency, and unlocking new opportunities for innovation By leveraging the power of technology, companies can create a more efficient and resilient supply chain, driving competitive advantage and achieving their business goals As technology continues to evolve at a

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