The supply chain is getting bigger and we are beginning to see an even greater intersection of blockchain technology and the supply chain.
In its early days, blockchain had kind of a bad reputation for being an avenue for criminals to initiate transactions without being tied to an institution like a bank. But, in today’s digital world, we’re seeing a lot of very legitimate use cases for a decentralized, distributed ledger system.
If you don’t already know, a blockchain is a growing list of records that are linked together and stamped with important information like transaction data and a timestamp.
But what is the blockchain really? The Harvard Business Review definition: “It’s an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.”
Despite its storied past, the blockchain is set to soar. Wintergreen Research, compiled a report for IBM, estimates blockchain markets are headed toward $60 billion worldwide by 2024. This is up from $706 million in 2017.
Another research firm, Grand View Research, anticipates the global blockchain technology market will reach more than $57 billion by 2025.
We’re seeing sectors like agriculture, financial services, healthcare, insurance, manufacturing, retail, logistics, and utilities starting to look at the value and feasibility for blockchain in their industries.
According to an analysis by McKinsey, blockchain’s short-term value is predominately in reducing costs before creating transformative business models. McKinsey’s analysis suggests blockchain is still 3-5 years away from feasibility at scale.
As I see it, there are two major needs blockchain addresses including record keeping and a registry of transactions. Within the record keeping category, blockchain can store static data like land titles, food safety and origin, patents, and so on.
It can also store identities for uses like civil registries and voting. It can also enable smart contracts. Blockchain can also facilitate dynamic registries and payments infrastructures.
So, how is it impacting the supply chain? Wintergreen Research pointed to managing supply chains as one of the key ways blockchain technology demand is growing among IBM customers.
IBM and Maersk have built a blockchain-based supply-chain solution that enables the realtime exchange of original supply chain events and documents through a data pipeline, ultimately connecting all the participants in the supply chain ecosystem.
That’s essentially what blockchain is doing; it’s providing transparency and trusted access across the supply-chain ecosystem.
In food, this is becoming so important. IBM Food Trust is an example of how blockchain tech is impacting the complex food supply chain.
Food safety is really important, and there are so many different players involved in getting food from the producer to the final consumer that it can be hard to keep track of what’s happening along the way to a particular product.
When that product is food, something you’re going to put in your body or feed to your children, that data—that end-to-end visibility—can be absolutely critical.
Food Trust leverages blockchain to not only digitize information in a way that creates visibility but also opens the door to many other benefits, like better supply chain efficiencies and less food waste.
This is the way of the future.
There is no question blockchain is the future of transactions, in food especially, but this is also true across numerous other markets. We are witnessing consumers’ preferences changing. They still care about pricing, but they also really care about safety.
They want more information about where their products are coming from, who made them, what happened to them on route, and how long they’ve been on the shelf.
We don’t just send our fleet out anymore and assume that our drivers, fleet vehicles, and whatever assets may be onboard with them will end up where they’re supposed to be safely and on time without any issues. We want proof. We want data.
We want data on that driver. Did he drive safely, or was he distracted? Did he make unauthorized stops? We want data on that truck. Did it perform as intended? Does it need any repairs? We want data on those assets. Are they safe on the jobsite, or did someone move them or take them without permission?
You can see how this kind of thinking transfers to all areas of a person’s life. And speaking to supply chain in particular, traditionally, there are too many middlemen in supply chain. There’s an endless amount of back and forth, things are written down on paper and then lost … in general, there’s not enough accountability.
It’s not fast enough, transparent enough, or, frankly, trustworthy enough.
It’s obvious the blockchain has moved out of the shadows of bitcoin and cryptocurrencies. Blockchain is here to stay, and it’s here to change the supply chain in a fundamental way.