Blockchain is getting its fair share of buzz lately. Bitcoin and other crypto-currencies are stealing headlines with massive overnight gains in value. The risk/reward is exciting and capable of grabbing major headlines. But if you are like me, you are watching from the sidelines, wondering if this is another one of the “investments that got away”. I will be honest, I will probably never own bitcoin, mostly because its fundamentals go against everything that I learned and have come to know about solid investments. But as I dig a little further into its core technology – blockchain - there is something intriguing here as it relates to Supply Chain. Could blockchain be a safe bet AND a breakthrough for how we track and trace our inventory?
And specifically, as it relates to supply chain management, “whenever value changes hands or the status of asset changes, blockchain is ideally suited for managing the process. That’s why some experts believe blockchain can become a "
Efficient traceability from farm to store is being pursued by big corporations conducting blockchain PoC’s (proof of concepts) with the idea of improving supply chains. Some examples are Wal-Mart using blockchain to track mango’s back to the grower, others using blockchain to track tuna fish with origins in parts of Indonesia. And the IBM – Maersk project, where according to Maersk’s Chief Commercial Officer Vincent Clerc: “The big thing that is missing from this industry to digitize and unleash the potential of the technology is really to create a form of utility that brings standards across the entire ecosystem,”
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The ecosystem for food carries risk of compromise, contamination, and spoilage as it travels all the way from farms to processors, distributors, and retailers. More transparency is needed to reduce the effects of these risks. Blockchain can help digitally trace and authenticate food products from an ecosystem of suppliers to store shelves and ultimately to consumers.
The world’s shipping ecosystems with more than $4 trillion of goods shipped every year have grown in complexity. Shipments of refrigerated goods from East Africa to Europe can go through nearly 30 people and organizations and involve more than 200 different communications. This indicates that today, a vast amount of resources may be wasted due to inefficient and error-prone manual processes.
Blockchain technology addresses the many supply chain challenges as it establishes an immutable record shared of all the transactions among network participants that is updated in real time, enabling permissioned parties in a private blockchain environment access to trusted data in real time.
It is expected the joint Maersk-IBM venture to get regulatory approval in early spring and to begin selling software subscriptions by the third quarter of this year. If accepted in a massive way blockchain could be the long-awaited game changer that will enable truly integrated supply chains for a wide range of industries. That is a real breakthrough!
Yet there are several issues that warrant attention. With the proliferation of platforms and protocols in the marketplace today, no single solution has emerged as the clear winner; consequently, no technical or process standards are yet in place. Likewise, operational siloes keep some companies from either developing clear business plans around blockchain or collaborating with ecosystem partners for mass adoption.
Blockchain is building on a package of proven technologies—including distributed computing, cryptographic encryption, and hashing. By utilizing blockchain to improve sustainability through data, advances in technology and analytics, it is projected that response times may be cut in half and quality issues can be reduced by 20%. Gartner projects that blockchain business value will grow to $176 billion by 2025.
The only thing that seems ready to “bust”, is the old, slow, paper intensive way of managing supply chains. I’m calling blockchain a breakthrough!
By Steve Dwyer
Principal, Vice President of Sales and Marketing
WithoutWire Inventory Sciences