Bringing greater transparency to supply chains with blockchain

Publish date:

Blockchain technology offers the potential to reinvent supply chain project delivery.

A brief history of blockchain

  • 2008 – The mysterious Satoshi Nakamuto published his bitcoin white paper
  • 2009 – First bitcoin minted
  • 2013 – More money is moved with bitcoin than with Western Union
  • 2016 – Bitcoin reached around US$900 by the end of the year
  • 2017 – CoinDesk shows Bitcoin Price Index’s all-time high of $19,783.21 on Dec. 17.

While bitcoin may be the most well-known use of blockchain, it is simply a proving ground when compared with the other potential uses for blockchain technology.

How it works

Blockchain technology offers the potential to reinvent supply chain project delivery, using the IoT to monitor and automate the process end to end with minimal human interaction in otherwise trustless environments.

 

When is it appropriate to use blockchain?

As with any technology, it can drive dramatic and disruptive change when applied correctly. Blockchain is best used when:

  • Immutable verification is paramount
  • Multiple parties want to share and update data
  • When removing third parties and intermediaries will reduce cost and complexity
  • When fast responses are required.

Challenges faced

Many of the challenges result from the complexity of defining the logic that the smart contracts will carry out:

  • The digital identities of users and actors need to be binding and non-repudiable in the real world
  • There must be consensus on roles and permissions of participants, as well as common standards
  • Legal and control frameworks must be agreed.

The largest smart-contract hack to date has been the DAO (distributed autonomous organization). 15% of all Ether in circulation at the time was drained from its smart-contracts, resulting from the exploitation of a code vulnerability. This showed just how important it is to ensure that the logic within a smart contract is fully defined and robust enough to remove the risk of manipulation.

Blockchain tools

Blockchain offers a range of uses and benefits that can come together to facilitate the supply chain process in a way that has been previously impossible.

 

Supply chains

Supply chains are inherently and historically opaque, where participants have limited visibility.

           “As-is”

“Could-be”

Blockchain technology can allow participants to know:

  • Are the goods safe?
  • Is our supply chain ethical?
  • Where is the value?
  • Are we on schedule?

This solution could provide immense value in the form of:

  • Records of each stage in the delivery is captured on the blockchain
  • Bills of lading can be represented and authorized
  • Loses can be identified on a granular level
  • Trust is increased, fraud reduced, and administration simplified.

A basic use case for blockchain in supply chains

                       

Practical benefits
— Materials can be tracked at a fraction of the cost of current systems
— Any tampering will be easily noticed by the other blocks on the chain
— No reconciliation required due to a single ledger, reducing costs and enabling faster vendor payments
— Transparent, tamper-proof audit trails for administrative and regulatory requirements

Companies that are already using blockchain for supply chain monitoring

In conclusion, despite the formidable challenges that must be overcome for this technology to be correctly used, this is an area that may well lead to economic revitalization. For this to happen, the challenges must be weighed against the demands of a global economy that, although more connected than ever before, still has fractured communication and isolationist forces that hamper trade.

Related Posts

blockchain

Are decentralized applications (DApps) limiting blockchain adoption?

Sumit Kumar
Date icon December 7, 2018

While DApps is the critical component of blockchain-based architecture, the challenges...

blockchain

An evolving world for QA and testing

Vivek Jaykrishnan
Date icon November 28, 2018

Organizations who wish to differentiate themselves from competitors will have to maneuver...

#FD4DI

A portfolio strategy for your SAP Leonardo Innovation

Aditya Kamalapurkar
Date icon November 27, 2018

Digital transformation brings with it the butterfly effect and the non-zero-sum game...

cookies.

By continuing to navigate on this website, you accept the use of cookies.

For more information and to change the setting of cookies on your computer, please read our Privacy Policy.

Close

Close cookie information