Adrian Clarke, founder of tech start-up Evident Proof, reveals the power of blockchain technology in the supply chain.
An occasional series of vendor perspectives on the world of connected business.
At this point, one of the most significant accomplishments of the cryptocurrency movement that swept the world in 2017 is the broad identification of its underlying accounting mechanism, the blockchain.
First introduced alongside Bitcoin in 2009, blockchain is taking the world by storm as it combines incredible hype with burgeoning capabilities, and applications that extend well beyond the technology’s crypto origins.
Of course, blockchain isn’t just broadly usable. It has specific industry applications that are increasingly evident, and, perhaps, none is more compelling than its use in supply chain management.
The notion that a blockchain can improve supply chain management is not entirely novel. In 2016, TechCrunch reported on the technology’s potential to “fix the current problems of the supply chain.” Since then, several pillars of the tech industry, including IBM, Samsung, Alibaba, and others, have invested heavily in blockchain technology as a next-generation supply chain management tool.
Blockchain is even gaining clout on Capitol Hill, where it received several hearings intended to educate officials on its various use cases, including, as the hearing’s title, “Leveraging blockchain technology to improve supply chain management and combat counterfeit goods” indicates:
Indeed, blockchain is drawing considerable interest as an enterprise initiative that is poised to make a dramatic impact on companies’ technological capabilities and their bottom lines. A study by PwC that surveyed 600 executives found that 84 percent are “actively involved” in pursuing the technology. As the survey notes, “Everyone is talking about blockchain, and no one wants to be left behind.”
With so much attention directed toward blockchain, it’s likely that more companies will begin exploring the technology as a possible next step for their own supply chain initiatives.
There are some things that supply chain executives, both the familiar and the uninformed alike, should know about blockchain technology before they proceed.
1| Blockchain solves a real problem for supply chain management
When new technologies emerge, they often go through a hype phase that over-extends their capabilities and use-cases to the point of absurdity.
The rise of the internet, to which blockchain is frequently compared, was primed with platforms that were oversold and under-delivered. Ultimately, as companies like Pet.com and Garden.com learned, sometimes there isn’t a product market, regardless of how competent the technology may be.
In contrast, blockchain technology offers tangible solutions for some of the most pronounced challenges impacting supply chain management.
In its current format, the supply chain is faced with several shortcomings that need to be addressed. For instance, supply chain records are notoriously opaque and frequently inaccessible to other members of the supply chain.
In many ways, it’s as if the supply chain operates on a need-to-know basis, and nobody needs to know.
Additionally, concerns about network security and the integration of ancillary technologies create a cadre of other problems that the current infrastructure is not prepared to confront.
However, a blockchain’s decentralised, immutable, and fully-accessible records bring clarity to all points of the supply chain, and it places all stakeholders in the know, so problems can be resolved and major disruptions identified.
As Deloitte, a research and consulting firm with significant research in the area of blockchain technology, notes:
Using blockchain in the supply chain can help participants record price, date, location, quality, certification, and other relevant information to more effectively manage the supply chain.
In short, blockchain is much more than hype.
| Blockchain accounts for next-generation best practices
The modern supply chain relies on big data and real-time analysis of shipping status to provide a live snapshot for critical stakeholders. This is made possible by emerging technologies including AI and IoT, which can assess supply chain initiatives and monitor their progress.
For example, a shipping company can attach cheap IoT tracking technology to items, which allows for real-time tracking and logistics assessment.
When paired with blockchain, features like smart contracts or a decentralised ledger, these technologies become highly advantagous in an active shipping environment. A 2018 Gartner study observed that this methodology is already being implemented to track diamonds on their journey from mines to storefronts.
| Blockchain prioritises accountability
Several components of the supply chain, from item authenticity to food safety, can all be improved by better technology. Companies know this, and it costs a lot of money to accommodate their failures in this regard.
Consider the implications for the food industry. Because the current supply chain infrastructure lacks specificity, when a foodborne illness breaks out, companies issue broad recalls that accounted for nearly 21 million pounds of food sent to landfills rather than supermarkets.
Food Safety Magazine describes this scenario as “the food industry’s biggest threat to profitability.” And that’s before you consider the sheer wastefulness of such practices.
Meanwhile, when companies implement blockchain technology into supply chain management, the distributed ledger, combined with real-time data from a variety of IoT devices, can allow all stakeholders to make informed and targeted decisions that mitigate risk to consumers and protects the company’s valuable product.
In this way, companies can embrace accountability for product safety, integrity, and originality while maintaining confidence that they have the technology that affords them the ability to act.
Blockchain technology is undoubtedly in a hype phase, but that doesn’t mean that its capabilities are inadequate or superficial. Rather, when applied to specific sectors, like supply chain management, blockchain is a transitional and transformational technology that can accommodate next-generation technologies and expectations, so that companies can operate with confidence and precision.
Blockchain technology is worth considering, and it’s worth implementing.
Internet of Business says: This opinion piece has been provided by Evident Proof, and not by our independent editorial team.