Blockchain is the word on the street and everyone’s lips. From finance to healthcare and logistics, the world’s movers- and shakers are racing to be the first to adopt blockchain as the most revolutionary technology since the Internet. Hey, guys its Layah Heilpern here with Exodus.
In this series, I will take you through the futuristic world of blockchain and its compelling use cases today, whether it’s tracking food supply chains or securing your digital identity. The future is now. Find out why blockchain is the next big disruption that will reshape the way humans live, work and play for a better and more equitable world.
Welcome to the Blockchain Future Of Supply Chain Management For most people, the supply chain industry is something that hums in the background like clockwork.
We may purchase a laptop, mobile phone or a car, but rarely think about how it has been manufactured and assembled using raw material and parts sourced from all over the world. Take the iPhone for example. Assembling this one device is a global, collective effort; with accelerators and gyroscope made in Taiwan, power management components made in Italy, Bluetooth and WiFi components made in Japan, and many many other parts from the USA, Germany and South Korea.
All these various components are then brought together and assembled in Shenzhen, China, before being shipped out again to various parts of the world. This is the case for most global products from automobiles to processed foods. Then, Covid-19 happened. The pandemic was a massive global shakeup that brought the supply chain industry into the spotlight.
Suddenly, as borders were closed and factories shut down, manufacturers all over the world were caught empty without the raw material and essential parts they needed to assemble their products. Throughout various points in the pandemic, there were shortages of microprocessors to manufacture laptops and even the precursor chemicals needed to make common medical drugs.
Food and other basic commodities such as toilet paper became scarce as global supply chains ground to a halt. Imagine consumers unable to get over-the-counter prescription drugs because of restrictions in India, which supplies a quarter of the world’s generic drugs. Also, imagine cars staying on the assembly line because they are missing the critical parts required to be rolled out.
All these were actual circumstances that have occurred because of the pandemic. Supply chains were previously focused on performance standards such as low cost, speed and efficiency, but the pandemic has shifted the sentiment towards values such as resilience, transparency and trust.
To tackle this pandemic and any other future global challenges, businesses and governments around the world are realising that resilience in supply chains is critical to survival and sustainability. Covid-19 has created the perfect storm to usher in the need for deep structural change in the supply chain industry.
And that change is coming in the form of blockchain technology. How does blockchain technology meet the task? The supply chain industry faces some fundamental challenges that need to be solved.
Firstly, the industry needs the ability to accurately track and trace any product on a supply chain at any point of its lifecycle from coffee beans being harvested in Brazil, roasted in Seattle to being sold in Singapore.
Secondly, they require full visibility of all trading partners and the data that come with it, such as certifications, licenses and approvals. Thirdly, and ideally, all this is enabled by a single, interconnecting platform that is trustworthy, fail-proof and accessible to all.
Blockchain technology brings to the table its features of Transparency: Being open-sourced and public, blockchain technology allows every partner along the supply chain to have full access and visibility to all transactions on the chain from the supplier to the warehouse and to the end-consumer.
Better yet, everything is located on a single source of truth, providing standards and consistency across a global network that would otherwise be filled by different systems. Immutability: Data and transactions which are recorded on the chain may not be tampered with or altered in any way.
This prevents forgery, fraud and deters theft as data such as certificates of authenticity and licenses are kept on the chain and maybe verified or held accountable at any time. Resilience By default, the public, the decentralized ledger is highly resistant towards attacks as it is protected by multiple nodes securing the network instead of just one single point of failure.
This feature would prevent another Maersk incident, where the entire IT operations of the global shipping conglomerate were held hostage by the NotPetya ransomware in 2017. And finally, Trust Not only are brands able to build further trust with their consumers, but a blockchain also enables suppliers to collaborate seamlessly through blockchains trustless infrastructure.
Any bad actor can be easily identified and tracked and traced for accountability. In terms of food supply and safety, blockchain-based supply chain solutions have tremendous potential. Customers are becoming more aware and discerning in terms of wanting to know exactly where their products come from, and whether they have been produced according to ethical or sustainable standards.
Concerns about product quality, origin, worker rights, animal welfare and carbon footprint are the new demands of the modern consumer, and a blockchain-based solution will be able to meet these demands. With a blockchain-based food supply chain system, for example, consumers can simply scan a product code to view its entire transaction history on the blockchain.
This will verify its origin, authenticity, and provide digital reassurance of the safety and quality of the product. This feature is able to add tremendous value to pharmaceutical products, as patients rely on the legitimacy and safety of medical products to get better and lead better lives.
Blockchain technology can also be used to prevent fraud or forgery by authenticating every item on the chain. This has striking potential in markets such as diamonds, designer handbags and sneakers where forgery and theft are rife.
Blockchain technology also has the potential to streamline, simplify and speed up product recall if there’s a fault or safety issue. Costly and inefficient product recalls will be a thing of the past.
Tracking peanuts affected by a salmonella outbreak, or recalling faulty ignition switches in cars can be executed with pinpoint accuracy.
Supply chain disruption is shaking things up behind the scenes and some of the blockchain and distributed ledger technology companies developing solutions in this space include Vechain, Hedera Hashgraph, ShipChain, Waltonchain, and OriginTrail.
Depending on whether enterprises demand a public or private ledger which is decentralized or centralized, or, a hybrid of all the above, blockchain technology is being tested in different permutations for major global supply chain companies.
One example is MyStory, a blockchain-powered digital assurance solution powered by Vechains Toolchain and verified by German quality assurance provider, DNV GL.
MyStory is currently being used in several pilot programs to trace and verify products such as Italian wines and designer clothes. Imagine drinking a glass of fine vintage wine and being able to tap into its entire product history and journey from seed to bottle.
From growth to harvest and production, storage and transportation, you could be assured of its absolute quality and origin. The leap from existing supply chain databases and networks to blockchain-based solutions is likely to happen in stages, and the transformation will not happen overnight.
However, Covid-19 has accelerated the journey as stakeholders are re-evaluating future business values. Previous benchmarks such as speed and cost may very well become prioritized in favour of values such as trust, resilience and transparency especially as the world looks to rebuild itself and become future-proof against another global black swan event.
Welcome to the future of the supply chain. The future is blockchain. The future is decentralized.