For many people it’s a puzzling technology to grasp, but it’s been predicted that blockchain technology will see fierce emergence this year because of the untapped efficiencies it will offer businesses. And it doesn’t stop there: as we continue to cram smarter semiconductors into smaller and smaller devices, the window of opportunity for technologies like blockchain is set to creep open even more.
So, what does blockchain have to do with supply chain management? And how can blockchain make your business more profitable? In this post we look at blockchain technology in supply chain management and what it means for end-to-end tracking.
The broad application of blockchain technology
“Blockchain technology isn't just a more efficient way to settle securities. It will fundamentally change market structures, and maybe even the architecture of the Internet itself.”
- Abigail Johnson, CEO of Fidelity Investments at Consensus 2017.
It’s difficult to explain how blockchain will fundamentally change your supply chain without first looking at what blockchain is and why it’s so highly spoken about.
Blockchain is an advanced distributed ledger technology that is essentially an encoded, open source database where records and transactions are stored and kept track of. You’ve probably most commonly heard of blockchain in relation to bitcoin, however, blockchain is the technology that powers bitcoin, so it’s easy to see why people often associate the two closely together.
The standout feature about blockchain, however, is that it supersedes the world of cryptocurrency because these ledgers can be applied to basically any industry you can think of. Bitcoin cannot be anything other than a digital currency, but a blockchain can be created for any industry, for any series of transactions.
Take a look at the image below to see how the traditional concept of the internet is being transformed by new digital ledger technologies:
When you think about the internet, you might think of that funny meme you saw on Facebook and the latest movie trailer on YouTube. When you think of blockchain, you need to think in terms of transactions relating to real estate, currency etc. If you can remember this, you shouldn't have an issue understand what digital ledgers really are, and when you break it down like that it's really quite simple.
If you've never heard of blockchain before, the fact of the matter is: they are predicted to be the fastest growing and the most disruptive technology of our time, and the potential for it to change business is an incredible topic, but for this purpose we’ll look at how it can be applied to supply chain management and logistics only.
Keeping better track of products in your supply chain
Logistics and supply chain professionals will understand the pain of trying to keep track of products from the point of manufacture all the way to point of sale. Blockchain technology provides a “shared version of events” for all members of your network, so that it’s possible for you, and all third-party providers involved in your supply chain, to track products from the moment they are first manufactured.
Not only will blockchain technology make your operations more streamlined between parties, but it also improves trust between parties. No longer will you need to take time to build relationships and prove your worth, all the information a third-party needs to do business with you is available in an open-source and transparent format.
This feeds into the next point: blockchain technology will render traceability of your supply chain fool-proof. The WWF is already starting to track tuna from the moment its caught, to the moment it reaches the factory. They can then easily access all this information that is automatically uploaded to the blockchain. No room for human error. No room for mistakes.
And case studies still continue to pour in:
Maersk and IBM have entered into a joint venture where a blockchain-based electronic shipping system will track international cargo in real time.
Being able to keep track of goods as they move through the supply chain is one of blockchain's biggest selling points for logistics professionals, and innovative businesses are now beginning to tap into this. Below we take a look at Shipchain and how its using digital ledgers to create more secure and more efficient supply chains.
The first of many supply chain solutions that use blockchain technology
So now we’re all on the same page when it comes to how disruptive and process-changing blockchain technology will be, let’s look at just one start-up that we’re sure will be one of many.
Shipchain has been touted as the logistics platform of the future, designed to bring you from poor tracking, to end-to-end track and trace. From zero accountability, to incentivised responsibility. From fractured communication, to full visibility. Well, you get the point.
As mentioned above, a blockchain is a digital ledger, and it’s there to keep track of all transactions that occur from manufacture to point of sale. Shipchain uses this technology to record each event in what’s known as a main blockchain, and then stores things like transport information in side chains that can be accessed by all involved parties whenever they need it.
The technology is flexible, meaning you can keep as many side chains in your main chain as you need, and your main chain will be built according to the level of detail in your transactions you need. All of these features may not sound so different to some conventional forms of supply chain tracking and tracing, however, blockchain could present itself as an incredibly powerful tool for you to manage the hordes of complex information in your supply chain.
Businesses today have a lot of learning to do when it comes to a technology as complex as blockchain. But fear not. According to Forbes writer Larry Myler, the more we familiarise ourselves with this new language, the easier using the technology will become.
There is no doubt the predictions about blockchains efficacy are very convincing, but the time for these predictions to come to fruition is still an unknown variable.
For now though, we can look to start-ups like Shipchain to keep leading the way to better, faster and more lean supply chains.
We hope you enjoyed this post about blockchain technology and how it will change supply chain management. Do you agree with the experts: will blockchain technology fundamentally change logistics? Comment below to let us know your thoughts.