Blockchain a game changer for the Supply-Chain
How many third-parts do companies need to rely on, especially in the supply-chain, in order to make business together ?
If you think about it, really many. Without being exhaustive, we can think about banks, customs, freight companies, quality inspectors, insurances, intellectual property registers, taxes departments, etc.
The experience show that interfaces between those parts and one’s organization are time consuming, causing delays and misunderstandings, require a high level of control and are far from being very efficient.
The Blockchain is a technology that will help to improve those heavy processes, make is faster, easier, and more cost effective.
In Techcrunch (1) for example, Ben Dickson assumes that “the supply-chain is an opaque and faulty process”, and that the Blockchain can allow to remedy.
Giulio Prisco in Bitcoin magazine (2) confirms this, saying that “the supply-chain sector represents billions of dollars in enterprise revenue, but is fraught with losses and inefficiencies resulting from risk, fraud or anachronistic manual paperwork delays”.
This same article also states a Deloitte survey, concluding that goods and manufacturing companies start to invest in Blockchain experiences. Almost 50% of the executives interviewed plan to spend $5M or more for 2017. This stays modest, but should increase a lot.
To make the above statement very concrete, an article from the Harvard Business review (3), describes the need for this open, safe and decentralized access to detailed information, through an incident in the supply chain of a chain of restaurant.
As a matter of fact, a Mexican food company had to face a drop off of its share following a quality issue in one of its restaurant. Incident they could not solve easily lacking strong and indisputable information about the source of their food. The article shows how this chain of restaurants would have been able to solve its issue much faster by being able to track through an open data base like a Blockchain, the origin of their food.
A Blockchain would have improved their position in front of this critical situation.
On top of tracking the origin of a raw material, the article from Jon Amerin Vora (4), describes more potential improvements in the Supply Chain like :
Recording the quantity and transfer of assets—like pallets, trailers, containers, etc.—as they move between supply chain nodes ;
Tracking purchase orders, change orders, receipts, shipment notifications, or other trade-related documents ;
Assigning or verifying certifications or certain properties of physical products; for example determining if a food product is organic or fair trade ;
Linking physical goods to serial numbers, bar codes, digital tags like RFID, etc ;
Sharing information about manufacturing process, assembly, delivery, and maintenance of products with suppliers and vendors.
As a synthesis, Decision Achat reports that in the field of supply-chain, Blockchain can bring :
Higher traceability ;
Fight against fakes ;
Use of smart contracts (see our article "With the blockchain the future of contract is Smart”).
Some companies have already seen the potential of the Blockchain in the supply-chain and started some experimentation. Some articles detail those trials.
For example, Giulio Prisco in BitcoinMagazine (2) details how Walmart, the huge US supermarket network, is launching a project in order to track and trace porks in China and produce in the US.
Walmart bets that Blockchain “can help to overcome issues such as delays and errors", and in the end, “enhance the safety on the food on the table”.
This project is about collecting a certain amount of datas along the “production” chain, and have it available, thanks to Blockchain, more easily more rapidly.
The article points out also that this data collection requires some development in the field of “data entry tools” to ease such operations by farmers.
So this represents quite a vast area of development for Walmart, but probably very exciting.
In the HBR article (3), we learn that “even more value can be added if this technology is combined with sensors”.
That is the move that is described in the pharmaceutical market. For example, a technology company (Chronicled) has developed an “all-in-one, tamper-evident, and Blockchain solution for packaging and physical asset tracking presenting a major step forward in the supply chain provenance”. It is called the CryptoSeal.
The article from Cryptosoinsnews (5) develops that the most exciting use case of this technological seal is with pharmaceutical tracking.
As a matter of fact, this seal could be embedded on the pharmaceuticals packs, in order to guarantee the origin and the nature of product inside the box.
We are here at the crossroads of the Blockchain and the Internet of Things (IoT) (see the article “Why IoT has to do with the Blcokchain”).
What is the operation in your organization that could be improved thanks to the Blockchain ?
KEY WORD TO REMEMBER : Traceability
References to articles cited in the post
https://techcrunch.com/2016/11/24/blockchain-has-the-potential-to-revolutionize-the-supply-chain/ By Ben Dickson
https://bitcoinmagazine.com/articles/walmart-testing-blockchain-technology-for-supply-chain-management/ By Giulio Prisco
https://hbr.org/2017/03/global-supply-chains-are-about-to-get-better-thanks-to-blockchain By Michael J. Casey and Pindar Wong
https://www.loaddelivered.com/blog/why-blockchain-is-a-game-changer-for-supply-chain-management/ by Jon Amerin Vorabutra