Blockchain - the new breakthrough of the Supply Chain

Blockchain technology is stirring global supply chains. Smarter, faster, more accurate, blockchain is increasingly being successfully applied and developed by many companies.

Blockchain - the new breakthrough of the Supply Chain

Blockchain technology is stirring global supply chains. Smarter, faster, more accurate, blockchain is increasingly being successfully applied and developed by many companies.

In 2015, when E.coli was discovered at the Chipotle Mexican Grill food chain, 55 customers were hospitalized, media reports, investigations and business delays caused the chain to crash. blade. Without giving a specific cause and controlling the damage quickly, Chipotle took full responsibility and faced a 42% decrease in revenue, and then 3 years of extremely bad business.

The main cause of this crisis is also the greatest risk of supply chains using many different suppliers: Lack of clarity and accountability in a complex supply chain. Unable to control the supplier in short time, Chipotle could not completely stop or cut off the source of the disease immediately.

Today, a number of startups and corporations are slowly discovering a solution to this problem: By using blockchain to transmit information and record activities to control the flow of products and services between partners, even between countries.

What is blockchain?

Blockchain is a database of information that is linked together and expands over time. Each block of information in the blockchain contains information about the time it was created and linked to the previous block, so this database is called a blockchain. Blockchain is designed to resist changing data: Once the data has been written there is no way to change it.

Apply Blockchain in the supply chain

In a recent Harvard study, Michael J. Casey and Pindar Wong realize that blockchain technology is being developed by tech startups, with blockchain-based supply chain applications, not stopping there, Large groups such as Walmart, IBM and BHP Billiton are working to improve company product flow and information tracking.

Provenance, a UK start-up, allows users to "share product supply chain information and the company's impact on the environment and society." Walmart is partnering with IBM and Tsinghua University in Beijing to track the inflow of pork from China using blockchain. Drilling giant BHP Billiton uses blockchain technology to track gem analysis from outsourcing parties. Startup Everledger uses blockchain technology to ensure the quality and origin of products, especially this startup aims to help gem companies avoid purchasing "blood diamonds" - mined diamonds. in war zones, in order to avoid financing the dictators.

Blockchain combined with smart chip technology and automatic tracking sensors will help speed up the supply chain, while improving the intelligence and flexibility of the chain. Michael J. Casey and Pindar Wong also stated that “Blockchain will become even more powerful when combined with smart contract / commitment models, through which rights and obligations of parties, especially liquidity terms. payments and deliveries will be handled in a fully automated manner. ”

In addition, blockchain's potential for automatic monitoring and updating is not limited to products; It can also improve personnel monitoring. Each employee in the supply chain will be given a unique code, and then encrypted and placed in the block chain. This allows all the rest of the supply chain to track the performance of every employee in the chain. Chipotle at the beginning of the article, for example, may find that an employee in the beef suppliers did not follow the sterilization process correctly, leading to the emergence of E.coli.

Oppotunity and challenge

In theory, to encourage growth, competition and innovation, the world supply chain needs a public Blockchain that is not under the control of either party. In other words, all data will be backed up and accessible by everyone. However, it will happen that private blockchains will be opened and operated by a small group, as team members will agree to preserve markets and profits. And so, there will be differences between individual blockchain chains, from which standards and consensus will be born ...

Another big challenge will be: Laws. Regulations, laws, and trade agreements will restrain ownership and disclosure rights. Especially the sea routes with many overlapping laws.

These challenges will be compared with the growing needs of a global economy recovering from the 2008 financial disaster, combining the split between the US and European countries. Blockchain with the potential to break all limits of global cooperation, combined with accuracy of information and control, will be a promising direction in the future. So inventors, entrepreneurs, academic centers and the government are gradually thinking that blockchain will be the backbone of the economy of the future.