How can Blockchain become an advantage for supply chain?

“Forget logistics, you lost,” said General Fredrick Franks, USA, 7th Corps Commander, Desert Storm. The art of carrying the necessary products on time, with good condition and in good shape, could decide the fate of a war. At the same time, in the 21st century the competitive advantage that could provide a well defined logistic plan for your business could become the factor that makes you succeed in your sector.

Well, Blockchain will provide that advantage: an immutable ledger that records everything and ensures that things are right. The next question that comes to our minds is how a simple decentralized ledger can change things so dramatically.

First of all it provides TRUST, empowering all the different characters along the supply chain with a powerful tool to share and visualize information. For example, just imagine that the meat from a supplier is in bad condition when it reaches the supermarket. The information will be uploaded to the network and the smart contract behind it will ensure a compensation (as programmed) to the store from the supplier.

If this is so powerful, what foundations does the technology still require?

First, in order to be useful, many different players must use it. This is first happening with high valuable products such as diamonds. The project, called Everledger, has created their own platform run on the Blockchain to ensure such a trust. They secured the characteristics of each diamond on the Blockchain network to create a digital thumbprint which different participants along the supply chain will use to enhance the provenance, verify the authenticity and track their origin. They have secured over 1,000,000 diamonds.

Second, along the supply chain there are other problems in other sectors such as health issues (food), time delays or cargo damage. To ensure that everything is going well, Maersk and Walmart have a partnership with IBM, which has more than 400 people working on its own Blockchain (Hyperledger Fabric) to provide the service for the industry. Maersk and Walmart are one of the most powerful companies in the international maritime commerce and in the retail space, so if they start adopting this technology others will follow.

Maersk’s first concern is saving time and money using a Blockchain network instead of all the paperwork that moves the shipping containers and their needs. This usually is 15-20% of the total cost (Longman, 2017). One of the goals includes putting 10 of 70 million containers shipped every year on a decentralized ledger. This is just the first trial, after this it can be expanded to other parts of maritime commerce.

Walmart has been testing this technology in China’s massive pork market in partnership with Tsinghua University of Beijing. The result reduces the time to trace food which will increase the traceability and transparency (CoinDesk, 2017).

Blockchain can have a different use in each part of the supply chain and the companies who figure out how first to implement it will definitely have a first move advantage. Blockchain is already here and it is time to think how one can improve their business. Building a useful case study is the tool you need to start to define the strategy.

#blockchain #supplychain #logistics #industry