Blockchain is an unalterable digital ledger that allows different segments of a supply chain to capture information about products, including the product’s origin, where it’s been, how it got to its destination, and more.
By creating this permanent history of a product from production to sale, it is widely believed that blockchain will increase trust, accountability, and transparency within a supply chain.
According to IBM, further to an increase in trust, a supply chain that utilises blockchain will benefit from reduced fraud, improved inventory management, cost reductions, and reduced delays from paperwork. It all sounds very promising.
In fact, so promising that Maersk and IBM have collaborated to create TradeLens, a global supply chain platform that features 90 organisations sharing important shipping data. According to IBM, “TradeLens allows for sharing of container events between stakeholders involved in transports. The platform does this by making available a single, centralised infrastructure that can be used by all official actors involved.”
The platform is not generally available at present. However, in its current format, it captures more than a million events around the world each day. IBM has also worked with major retailer Walmart on a pilot for their food supply chain that focuses on food safety. Beyond this, IBM is also working with a consortium of consumer goods companies on other blockchain trials. There’s definitely a flurry of blockchain activity within the logistics sector.
While these blockchain-driven pilot initiatives look impressive, what are the realities of a widespread uptake of blockchain within the world’s supply chains? Deb Ellis, Partner at Gattorna Alignment, notes, “Mostly, we see trials that feature a small part of the supply chain, rather than anything end-to-end.” She says that mass adoption of wide-spread blockchain initiatives in the supply chain is a while away; first, there are some notable roadblocks to overcome.
Ellis discloses there are three common concerns from business leaders. The first is a misconception that existing systems present a stumbling block to getting involved in blockchain initiatives. Ellis shares, “There is a perception, especially at a CEO level, that ‘our current systems aren’t ready’. This is untrue”. Ellis explains that existing systems often don’t present a significant challenge.
The second roadblock is the lack of supply chain-wide value proposition. Ellis says, “We have to be brutal about this, there isn’t a strong value proposition for everyone. There’s a strong value proposition for vulnerable products like meat, dairy foods, pharmaceuticals, and perishable vegetables – things that require traceability and impact health are high risk.”
Lastly, digitisation and the digital infrastructure required to make these initiatives a success is also a block at present. “With most supply chain applications, we don’t think of just blockchain. We think of blockchain and the Internet of Things.” Ellis clarifies the role of the Internet of Things, “If you’re going to track, you need the capability of tracking. You need sensors and the ability to go physically where the product is at different stages along the supply chain. And that’s going to require investment, and is quite complicated. “
“In industries such as meat, you need to be able to track animals until they’re processed, track them through processing, and then out again. There’s quite a lot of sensors and discipline that will be needed” she concludes.
What is the future of blockchain in the supply chain? Dr John Gattorna, Executive Chairman of Gattorna Alignment, says “The end game of blockchain is that it has the potential to disinter-mediate. It might lead to reducing the role of traditional retailers.”