While many people are familiar with blockchain in the context of financial applications, a lesser known and possibly game-changing application for this technology is supply chain. In fact, blockchain has the potential to bring a new level of efficiency and transparency to the global supply chain industry, revolutionizing how we interact with goods moving throughout the physical world.But what is blockchain? In a nutshell, blockchain is a framework for storing and verifying information in a distributed network, instead of in a single central hub. Traditionally, sensitive information is stored with a trusted central organization like a bank, a government, or a company. Blockchain provides a digital mechanism to create and verify information in a tamper-proof, incorruptible environment without relying on a third party’s centralized database.
Blockchain is often discussed in connection with another oft-hyped buzzword: IoT, or the Internet of Things. IoT refers to any system in which distributed sensors monitor goods in the physical world and share that data via a digital network. Most IoT products send the data they collect to a central location, and then distribute that data to their end customers. But with the combination of IoT (sensor data) and blockchain (decentralized data storage framework), you can collect data from things around the world and then send that data to an open decentralized network, instead of to a central third-party location.
What About Supply Chain?
So what does all this have to do with Supply Chain? Well, blockchain is all about storing and verifying data, and supply chain is one of the biggest data generators out there. With continuous, real-time monitoring of shipments’ location and condition, IoT solutions like Tive are providing access to all that data. Today, data is all funnelled through a centralized, trusted organization -- but our vision is bigger than that.
The blockchain supply chain will give shippers even more confidence in the accuracy and immutability of the data provided by their IoT solutions. It will eliminate manufacturers’ reliance on a third party to verify their data streams, giving them greater confidence in the authenticity of the data driving their strategic supply chain decisions.
The potential implications of blockchain for supply chain are enormous. At the same time, there are also significant hurdles standing in the way.
IP Challenges: All this data floating around in a decentralized network raises the question of who owns the data. Who can access which kinds of data, what data should go on the blockchain and what should be stored privately, and who should decide? Some sort of permissioning system will be essential, but the details of who will have access to what will need to be ironed out.
The Human Element: So much of supply chain today is governed by subtle human interactions and unspoken agreements. Will automated smart contracts be able to replicate the intricacies of those complex human relationships? Shifting from today’s fuzzy, trust-based system to something decentralized and objectively verifiable, while ultimately beneficial to the whole system, will no doubt be accompanied by some growing pains.
Despite these challenges, we are exploring a number of potential benefits that blockchain technologies could bring to supply chain:
Data Immutability and Traceability
Blockchain could help customers ensure data immutability and traceability by giving them access to a complete, cryptographically authenticated history of the shipment’s data. Today, Tive offers unparalleled visibility into our customers’ supply chain. With the addition of blockchain, we could offer not just visibility, but also increased levels of trust -- confidence that the data you’re seeing cannot be tampered with in any way, and that it represents the complete end-to-end journey of the shipment.
For example, today, if a customer wants to understand the source and full journey of a product, they might have no choice but to track down each supplier, distributor, and carrier who has interacted with the final product (and hope that they tell the truth). The blockchain supply chain would automatically provide access to all that data in a tamper-proof, decentralized database, and make it instantly available to the appropriate parties.
In addition, blockchain would make it possible to integrate smart contracts into an IoT supply chain visibility solution. Companies could pay and collect on invoices using automated, secure payments which would be processed automatically based on goods’ location and condition data. This would enable different parties throughout the supply chain to implement condition-based payments without relying on a trusted third party to verify or manage those payments. For example, when a shipment arrives, a blockchain supply chain could automatically recognize the arrival location of the shipment, determine whether any damage was experienced in transit, and process the agreed-upon payment without any need for haggling, negotiations, or in-person verification. This kind of automation would enable a new level of efficiency, cutting out paperwork, middlemen, and risk.
It will take time and hard work to achieve this vision, and there is a lot to be done before we even begin to integrate these components of blockchain technology into our visibility solution. But I am confident that blockchain is going to have a huge impact on supply chain. From basic data security, to smart contracts, to a fully decentralized system of tamper-proof data, the era of the blockchain supply chain is close at hand.
The future of supply chain is here. If you are interested in learning more or piloting with Tive, please don’t hesitate to reach out to me directly at: krenar [at] tive [dot] co.