How to use Blockchain to Better your Supply Chain
If you are here, you’ve probably heard of blockchain already and understand that the applications go way beyond Bitcoin or cryptocurrencies. While the benefits of blockchain promise to disrupt virtually every industry, Supply Chain may very well be the most promising of them all. The reason is because the very nature of blockchain addresses the core foundation of what makes Supply Chains challenging today.
Supply chains are extremely complex, often dealing with numerous individuals and entities, hundreds of processes, multiple geographic locations (including international), and a host of different invoices and payments. Global supply chains support everything from fast-moving consumer goods to food and beverage are inefficient, poorly tracked, and oftentimes exploitative. In the container industry, paperwork can account for half the cost of transport. It can quickly become cumbersome and inefficient, lacking the transparency required to ensure provenance and expedite movement of goods throughout the value chain. The very nature of today’s supply chains is driving demand for more transparency from virtually every stakeholder.
For example, today’s consumers are expecting more granular information on products in order to make more informed and or ethical decisions. Sellers are looking to unlock value by providing assurance and trust, commanding premiums for their special product lineage. Regulators want to more efficiently and accurately track and manage commercial ethical behaviors and sustainable resource management. On top of all of that, the very markets that supply chains serve have become global, with more open trade networks that highly value information authenticity.
These types of supply chain requirements for transparency, reliability and integrity are the very things that are inherent in blockchain solutions. Blockchain provides consensus through its shared ledger. Everybody has the same version of the ledger protected by cryptographic immutability guarantees, so there is no dispute regarding the authenticity and accuracy of transactions. Everybody on the blockchain can see the chain of ownership for assets and records cannot be erased or altered, promoting full transparency.
Blockchain essentially shifts the trust from central authorities to a decentralized consensus mechanism among all the network participants. Blockchain combines four key technological elements:
- Immutable Ledger – Blockchain is a write-once database, so it records an immutable record of every transaction that occurs.
- Decentralized Network – There are many replicas of the blockchain database and no one participant can tamper with it. Consensus among majority participants is needed to append to the database.
- Secure Cryptography – Uses tried and true public / private signature technology and applies it to create transactions that are impervious to fraud, establishing a shared truth.
- Smart Contracts – Ethereum blockchains can store both data and Smart Contract logic in the blockchain with ensures an automatic settlement on transactions.
So how are supply chains using blockchain today?
De Beers Diamonds uses blockchain to track diamonds from the point they are mined through each step of the supply chain, right up to the point they are sold to consumers. This gives consumers confidence that the provenance of each diamond is genuine and avoids “conflict” or “blood diamonds”. A nationwide study conducted in the US from 2010 to 2012 by the Oceana revealed that seafood is mislabeled up to 59% of the time. That’s why companies like Walmart and Tyson use blockchain to keep track of sourced food such as pork, seafood or chicken, so they are able to tell where each piece of meat came from. Mica, which is used in makeup, electronics, and automobile paint because of its shimmery, reflective properties, is often sourced from illegal mines by child laborers younger than 12 years old. Tracking the provenance and ensuring the source of goods leads to a healthier, happier society.
With so many applications for blockchain in Supply Chain, it’s no wonder why companies like Viant have built specific platforms for modeling business processes, tracking assets and building the supply chains of the future. That’s why Kaleido is teaming with Viant.io, to make robust supply chain applications easy to implement and run on the Blockchain Business Cloud. Viant.io provides organizations with verifiable insights as assets are managed and propagated through the entire supply chain. When you combine that with the radical simplicity that the Kaleido platform brings to creating and managing blockchain networks, it’s a powerful solution that has the potential to revolutionize supply chains across many different industries.
Try Kaleido and see just how easy it can be to use blockchain to better your supply chain operations.