The Role of Blockchain in Transforming the Supply Chain and Logistics Industry

The Challenge

Due to the complexity and lack of transparency of our current supply chains, there is interest in how blockchains might transform the supply chain and logistics industry. Our current supply chain is broken in several ways. 

Over a hundred years ago, supply chains were relatively simple because commerce was local, but they have grown incredibly complex.  Since manufacturing has been globalized, and a large portion of it is done in China, our supply chains are heavy with their own complexity.

It’s incredibly difficult for customers or buyers to truly know the value of products because there is a significant lack of transparency in our current system. In a similar way, it’s extremely difficult to investigate supply chains when there is suspicion of illegal or unethical practices. They can also be highly inefficient as vendors and suppliers try to connect the dots on who needs what, when and how.

What is blockchain and how can it help supply chains?

While the most prominent use of blockchain is in the cryptocurrency, Bitcoin, the reality is that blockchain—essentially a distributed, digital ledger—has many applications and can be used for any exchange, agreements/contracts, tracking and, of course, payment. Since every transaction is recorded on a block and across multiple copies of the ledger that are distributed over many nodes (computers), it is highly transparent. It’s also highly secure since every block links to the one before it and after it. There is not one central authority over the blockchain, and it’s extremely efficient and scalable. Ultimately, blockchain can increase the efficiency and transparency of supply chains and positively impact everything from warehousing to delivery to payment. Chain of command is essential for many things, and blockchain has the chain of command built in.

Everyone on the blockchain can see the chain of ownership for an asset on the blockchain. Records on the blockchain cannot be erased which is important for a transparent supply chain.

Examples of blockchain being used in supply chains now-a-days

Walmart uses blockchain to keep track of its pork it sources from China and the blockchain records where each piece of meat came from, processed, stored and its sell-by-date. Unilever, Nestle, Tyson and Dole also use blockchain for similar purposes.

Diamond-giant De Beers uses blockchain technology to track stones from the point they are minded right up to the point when they are sold to consumers. This ensures the company avoids ‘conflict’ or ‘blood diamonds’ and assures the consumers that they are buying the genuine article.

More will most certainly enjoy the efficiencies and reduced costs as they realize the potential and demand for blockchain-enabled solutions to transform the supply chain and logistics industry.