Will Blockchain Transform Supply Chain?
Supply chains are becoming complicated with multiple tiers and cross geographies, thanks to the technology which is making supply chains more and more integrated. Although data in different nodes is captured but it is still stored in silos, shared via mails and in some cases on paper itself. Transparency which is still one of the main challenges can be achieved by Implementing blockchain technology in the ecosystem.
It can help in more secure and transparent tracking all types of transactions and every time a product changes hands, the transaction could be documented. This creates a permanent history of the product from manufacturing to sale.
Blockchain: What It Means?
Blockchain is a technology for decentralized storage of transactional data. It is like ledger entry for each transaction, which is user based with no middleman. Every information is recorded on a shared ledger(block) and these blocks are linked together to form a blockchain.
Each transaction details in the blockchain (about the parties, transaction details and timestamp etc), is recorded in a code with each containing unique math based encrypted signature. This digital signature is a key to se curely conne ct each block of information.
All changes are recorded and encrypted in real-time and authenticated based on the ‘Consensus’ principle. Thus, Blockchain encourages a system of full transparency, credibility and connectedness.
Why Will It Work for Supply Chain?
Too many back and forth transactions and duplications raises the uncertainty, which stops supply chains from working well. Suppliers, providers and clients have to deal via third-party entities, instead of directly with each other.
What could be a simple transaction may turn into lengthy procedures with many steps. Blockchain could be the answer to many of such issues. Some examples of companies trying to implement Blockchain are:
- In Q2 of FY17, Pfizer and Genentech announced a blockchain project ‘MediLedger’, with the aim of prevention of circulation of stolen or counterfeit pills in the supply chain
- Walmart has already successfully run two experiments of blockchain with IBM- ‘Tracking Chinese pork’ and ‘Tracing Mexican mangoes’, which resulted in digitally tracking individual products in minutes, rather than days
What Will Be The Potential Risks?
Though one of the positive attribute s of Block chain lies in transaction security, there might still be considerable security risks due to vulnerabilities, cyberattacks and technological failure. Regulatory uncertainty also raise certain doubts in mind about blockchain regulation, legal enforcement and resolving technical dispute between parties (if any).
The entire ecosystem of blockchain is still new, so it will have its own adoption curve, risks and barriers like any other new technology. So, a well thought out plan with proper consideration on possible risks mitigation strategies, will help organizations reap its benefits and achieve supply chain transparency.
- Quartzmedia, Aug 2017, Link
- Fortune.com, Sept 2017, Link
- Logistics Bureau, Nov 2017, Link
- Provenance, Link
- Coindesk.com, Jan 2018, Link
- Supplychain247.com, Oct 2016, Link
- Global Trade Review, Jan 2018, Link
What we found interesting
"Here is an interesting video on Blockchain enabled supply chain of Coffee:"