Blockchain’s reputation has been built on its use as a shared ledger cryptocurrency platform, but its next big impact could be on the supply chain. A couple of years ago, U.S. retailer Walmart conducted an experiment: it took a package of sliced fruit from its shelves and tasked staff with finding out the precise origin of the fruit in question. It took almost a full week to find out the item’s provenance. Walmart subsequently deployed blockchain technology throughout its organization, and the tracing-the-fruit’s-origin exercise was driven down to a remarkable 2.2 seconds.
This is one of the central benefits of blockchain: it enables the tracking of a product throughout its entire lifecycle in a more traceable, predictable, safe and secure way. In supply chains, this is crucial because they are full of potential security risks, from theft and product contamination to fraud. Incidents can also snowball, as evidenced by the 2013 data breach of a major U.S. supermarket that put a massive 41 million customer accounts at risk. It started with a phishing attack on a relatively small contractor in the supply chain.
Blockchain has the capability to mitigate threats in the supply chain by introducing new levels of security and transparency into every transaction.
How would it work?
Supply chains are vast, interconnected repositories of large amounts of data. If that data is disorganized, it becomes harder to share it across multiple locations, meaning payment processes are slowed down and the supply chain becomes muddled and inefficient. The decentralized nature of blockchain makes it a great potential solution for these pain points: it offers fast and easy information sharing, counterfeit prevention and the chance to remove unnecessary bureaucracy from the supply chain. It provides the opportunity to deliver an enhanced experience to the end customer based on an improved data journey.
That’s not all. Blockchain can also provide these benefits to the supply chain:
1. Improved traceability and transparency. Keeping tabs on products is one of the fundamentals of supply chain. Using blockchain, whenever a product moves from one location to another, it gets documented in the public, shared ledger, which creates both transparency and a trail to trace back should there be any problems. Customers know exactly where their products came from, and so do suppliers, like the aforementioned Walmart.
2. Real-time tracking. Tracking products in real time means you can know both where an item is and also what condition it is in, greatly enhancing traceability and transparency.
3. The “trustless” chain. No more “trusting” that a particular product is authentic or that something you ordered will be delivered on a pre-agreed date. With blockchain, you can know for sure. Smart contracts pave the way for released payment automation and can be used to hold payment between a manufacturer and a vendor, or between vendor and consumer. No party has to pay in advance and then trust and wait. Payment can be released from escrow to purchase the item once the shipment has arrived and has been authenticated and accepted.
4. Reduced fraud and error. Certifying items in blockchain, again using smart contracts, can help industries save huge amounts of products that are lost to counterfeiting and fraud.
Furthermore, blockchain can help companies improve overall inventory management and lower their costs in general. The decentralization it provides allows companies to eliminate duplicate processes without any loss in accuracy and security, reduce paperwork, lower courier costs and remove middlemen from the supply chain. With less people and links in the chain, supply chain overheads can be cut considerably.
Vertical possibilities
The financial services and legal industries jump out as clear examples of where blockchain can enhance the overall supply chain, but it is finding its place in many other industries.
In the real estate space, blockchain is being used to address pain points, like a lack of transparency during and after property transactions, and to reduce paperwork, fraud and public record errors. Propy is a blockchain start-up offering house buying, anywhere in the world, through a blockchain-based smart contracts platform with documents signed and securely stored online. Deeds and other relevant paperwork in the property supply chain are recorded using blockchain technology and paper copies. It reduces the need for paper-based record keeping and speeds up property transactions in a secure manner.
Healthcare, another industry replete with paperwork and confidential data, is benefiting from blockchain, too. Blockchain technology in the healthcare supply chain network can enable hospitals, patients and other parties to share access to their networks without any potential compromise to data security and integrity. Blockchain start-up Tierion offers a decentralized data storage and verification healthcare platform and is already engaged with Philips Healthcare on projects.
Food and drink can also benefit from blockchain technology developments. The industry has been the victim of several incidents in recent years, from E. Coli and salmonella to meat cross-contamination, and blockchain can help distributors avoid these episodes. Using a decentralized ledger to record, store and track data means companies can monitor the food supply chain in unprecedented ways and trace any potential contamination back to its source. This can help food processing companies avoid sending tainted goods to distributors, allow food retailers to reduce or respond faster to product recalls, and ultimately reassure consumers that the food they have bought is safe to eat. This kind of blockchain approach is already being used by the TATTOO Wine Platform, through which customers can scan a QR code on a bottle of wine and trace its provenance from vineyard to glass.
There are all kinds of possible applications for blockchain in supply chain management, wherever proof of origin is needed or where contracts and sensitive data need a trustworthy repository along the chain. It will enable all manner of new accountable, transparent transactions.
Whatever sector you are in, you need the right partner to help you implement blockchain. We have experts in a wide range of industries, including financial services, smart cities, public sector, healthcare and logistics. We understand how blockchain works for your business and what benefits it can give you.
Our four pillar methodology ensures you get those benefits. We focus on: efficiency to make your company more agile through instantaneous transactions; managing risk to mitigate threats to your company and reduce the threat of cybercrime; cost reductions, using blockchain to limit and reduce costs through disintermediation; and trust, helping you improve trust by using blockchain in your business processes. Our multilevel ecosystem of blockchain start-ups and partners ensures you have the right expertise at your fingertips.
Read our white paper to find out how we help you get the most from blockchain’s benefits with our proven consultancy methodology. We will show you how blockchain can answer key business challenges with practical use cases, proofs of concepts (PoCs) and real-world projects across many different verticals.