A simple application of the blockchain paradigm to the supply chain would be to register the transfer of goods on the ledger as transactions that would identify the parties involved, as well as the price, date, location, quality and state of the product and any other information that would be relevant to managing the supply chain.
The public availability of the ledger would make it possible to trace back every product to the very origin of the raw material used. The decentralized structure of the ledger would make it impossible for any one party to hold ownership of the ledger and manipulate the data to their own advantage. And the cryptography-based and immutable nature of the transactions would make it nearly impossible to compromise the ledger. Some experts already believe that the blockchain is unhackable.
Several efforts are already being made to leverage the power of the blockchain in improving the management of the supply chain.
- IBM has already rolled out a service that allows customers to test blockchains in a secure cloud andtrack high-value items through complex supply chains. The service is being used by Everledger, a firm that is trying to use the blockchain to push transparency into the diamond supply chain and thus help fix a market fraught with forced labor and tied to the funding of violence across Africa.
- London-basedProvenance is aiming to build trust across the supply chain from the source to the consumer by deploying Bitcoin- and Ethereum-based blockchains that enable companies to be more transparent on how they build their products. This includes disclosing everything about environmental impact, where the products were made and who they were made by.
Frictionless, Transparent and Powerful
Blockchain could one day provide certainty on the exact source of every ingredient in every jar, in every case, on every shelf and at all times. Was your palm oil sustainably sourced? Are the cherries in your ice cream organic? Are the avocados in your salad imported from Mexico?
To ground it for operations people accustomed to physical product, blockchain is essentially a coding technique that allows for verification of any transaction between two entities. In food, for instance, it means each time a load of apples is confirmed to have arrived at the apple juice factory a code is generated, stored remotely as a string of characters, there to remain available for verification at any time in the future. Information about both the load of apples and the factory receiving it is ‘chained’ together by this code. In aggregate, the data can theoretically be portrayed as color-coded maps of every input, conversion step and output along the way from farm to fork.
Blockchain does not require devices, reading hardware or any physical process to affix tags to cases or pallets. As a result, virtually no transaction is too small to be worth generating a blockchain code, which means supply chain steps as minute as dumping a single bushel of apples into a juice press or removing the solids in a strainer can be cost-effectively recorded. Combined with state data on things like temperature, motion or chemical composition collected from sensors on equipment (aka the internet of things) blockchain could cost-effectively confirm everything that has ever happened to the food someone is about to eat.
The future of the supply chain
The blockchain has the potential to transform the supply chain and disrupt the way we produce, market, purchase and consume our goods. The added transparency, traceability and security to the supply chain can go a long way toward making our economies safer and much more reliable by promoting trust and honesty, and preventing the implementation of questionable practices.