Top Blockchain Use Cases for Supply Chain Management

There’s certainly a problem to be solved. For example, one shipment of refrigerated goods from East Africa to Europe can pass through roughly 30 people and organizations, with more than 200 interactions among them, according to shipping giant Maersk.

Blockchain technology can help ensure provenance, providing traceability across the supply chain. This can thwart counterfeiters and ensure safety. The technology also allows manufacturers, shippers and customers to aggregate data, analyze trends, and perform predictive monitoring.

Here are just a handful of use cases for blockchain technology, looked at through the lens of different industries.

Coffee

The coffee supply chain is ripe for reform. Production is fragmented – coffee is mostly grown in remote and developing areas, prices are volatile, and climate change threatens many coffee-growing regions, reports Inbound Logistics. And human rights organizations have long documented abuses of laborers. Blockchain can’t solve all those issues, but it can begin to bring transparency and efficiency to the coffee supply chain.

For example, Bext360 is using blockchain technology to better track all elements of the worldwide coffee trade-from farmer to consumer-and thereby boost supply-chain productivity, reports Bitcoin Magazine. After pilots in California, Uganda, and Ethiopia during 2017, it’s now live-for at least one producer. Ireland’s Moyee Coffee, which provides specialty coffee to offices, independent retailers, and online subscribers, expects to have all its coffee fully blockchain-traceable this year.

The selling points, of course, are increased productivity and a fairer deal for growers, bringing “an unprecedented level of transparency in a profoundly unfair industry,” according to Moyee. (The system ensures payments directly to the farmers immediately after their products are sold.) But there’s also an appeal for coffee snobs. Coffee drinkers can look at the data and verify the precise source of their coffee.

Seafood Verification

You’ve heard the stories about mislabeled seafood. Despite all the coverage back in 2016, it’s still going on. Blockchain technology can track fish and other seafood from habitat to market, and there are several such efforts underway. We’ll look at two – one that’s already in place and one that isn’t.

Pacific Tuna project launched: The Blockchain Supply Chain Traceability Project tracks tuna from vessel to market. The effort, focused on the Pacific Islands’ tuna industry, is intended to eliminate illegal fishing and human rights abuses. The new initiative, launched in late December by the environmental organization WWF and its partners – including blockchain company Viant – is intended to provide an example of how blockchain can preserve the integrity of the food supply. It provides a step-by-step way to verify the journey from the ocean to the market.

Sawtooth’s plan: Hyperledger Sawtooth, originally developed by Intel, is a modular blockchain platform. Perhaps its most notable feature is its consensus algorithm – the proof of elapsed time (PoET) algorithm – that lets users reach consensus, even in an environment where counterparties don’t know each other. (Other permissioned blockchains require that users know and trust each other.) Sawtooth 1.0 was released in January, but back in April 2017, it offered a demonstration to show how a seafood supply chain project can be built in Sawtooth. Seafood is caught and physically tagged with sensors that continuously transmit time and location data to the blockchain giving the buyer access to a comprehensive record of the fish’s provenance.

The seafood supply chain is particularly problematic, but many of the same concerns apply to food in general.

Food Safety

Many food safety issues, such as cross-contamination and the spread of foodborne illness, as well as unnecessary waste and the economic burden of recalls, are made worse by lack of data and traceability. It can take weeks-sometimes months-to identify source of contamination-or the point at which a product became contaminated. This means sicker people, lost revenue, and wasted food. For example, according to the CDC, it took more than two months to identify the farm source of contaminated papayas in a 2017 salmonella outbreak. Worldwide, one-in-ten people fall ill-and roughly 420,000 die-due to contaminated food, according to World Health Organization.

In partnership with Dole, Driscoll’s, Golden State Foods, Kroger, McCormick and Company, McLane Company, Nestlé, Tyson Foods, Unilever, and Walmart, IBM will be part of a consortium to determine how the global supply chain can benefit from blockchain. The first initiative: Reduce the time it takes to pinpoint and eradicate the source of foodborne illness, reports Coin Desk. Blockchain technology enables companies to trace contaminated product to its source quickly and ensure safe removal from store shelves and restaurants, according to IBM.

Consumers are increasingly demanding this sort of transparency, according to the 2016 Label Insight Food Revolution Study. Currently, only 12 percent of consumers rank brands as their most trusted resource for information about what is in their own food; 94 percent of consumers said that it is important to them that the brands they purchase, and manufacturers they purchase products from, are transparent about what is in their food and how it is made.

Pharmaceuticals: Keeping Them Cold and Real

Blockchain can improve the pharmaceutical supply chain in a variety of ways. We’ll look at two.

Keeping drugs cold: Pharmaceuticals, too, often need to be kept in a particular temperature zone. In a Hacker Noon piece, Samantha Radocchia of Chronicled explains how this could work. Many medications—especially biologics—being shipped from manufacturer to warehouse to another warehouse need to stay within a certain temperature range. With blockchain technology, this can be programmed in, triggering an alert when the temperature gets too high — or falls too low. “If the trigger is set within a delivery truck, you could set the air conditioning unit in the back to immediately turn on, or you could at least alert the driver to stop and fix the situation.”

Blockchain does more than monitor and verify, she explains. It can help “steward” medications from source to destination. And because all the processes and checkpoints are logged on the blockchain, the manufacturer or the shipper identifies and remedies trouble spots.

Eliminating fraud: Blockchain’s transparency may also help reduce fraud for pharmaceuticals, according to a report from Deloitte. That’s huge: The global counterfeit drug market size is around $75-200 billion, according to blockchain analyst Prableen Bajpai. The status quo—a complicated and opaque supply chain—exacerbates the problem. Blockchain’s immutability provides a basis for traceability of drugs from manufacturer to end consumer, identifying where the supply chain breaks down. In addition to cutting losses, there’s the potential to improve consumer safety and prevent some of the estimated 1 million deaths annually from counterfeit medicine, according to Deloitte.

Automotive Supply Chain

As we’ve discussed before, the automotive industry is ripe for transformation, and the potential is staggering. By 2025, the penetration rate of blockchain technology in functional areas such as retailing and leasing, supply chain logistics, and smart manufacturing will hit 37.2 percent, Frost & Sullivan predicts. In fact, EY predicts a blockchain across the entire automotive marketplace: Ownership, financing, registration, insurance and service transactions could all be tracked together.

But let’s focus on the supply chain.

Counterfeit parts: Determining provenance all along the way can help reduce the appearance of counterfeit parts within the supply chain. Deploying blockchain technology for supply chain logistics addresses a nagging problem for original equipment manufacturers — counterfeit parts. By being able to trace a part through every step of the supply chain, they can ensure the part that shipped is the part that arrived. That’s not news, of course. Connected Car Tech was talking about that back in late 2016. We’re not there yet, but we’re moving closer. And as IBM points out, this isn’t just relevant to the auto industry; it can apply to any industry that relies on parts.

Recalls: IBM offered this scenario: What happens if a part has a flaw that requires a recall? The status quo is deeply inefficient. Blockchain provides an alternative. Contingencies could be codified into smart contract. So, for instance, if the supplier discovers a fault, the provisions of the contract are triggered, and stakeholders are immediately notified once a permanent record of the flaw is recorded on the blockchain.

Bidding on business: Kouvola Innovation uses RFID tags to communicate shipping requirements to various carriers, reports Aftermarket Business World. The shippers then bid on the shipment and the contract would automatically be awarded to the one that best meets price and specs. Blockchain would track the shipments

Diamond Trade

Blockchain is helping verify the authenticity, provenance, and custody of diamonds across the supply chain, Forbes reports. Everledger, using Hyperledger platform, developed a blockchain solution for the diamond supply chain that’s designed to help prevent fraud and illicit global diamond trading. Each stone has what amounts to a fingerprint. It’s “a forensic view like dental marks or iris scan,” says Leanne Kemp, CEO and founder of Everledger, tells Forbes. Around 1.6 million diamonds reside on that blockchain.

More Efficient Contracts and Payments

This issue crosses all industries, so it gets its own category. Currently, suppliers may demand payment in 30 days, but the process is usually dragged out in an “insanely expensive dance,” Paul Brody, global innovation blockchain leader at EY, explains in How Blockchain Revolutionizes Supply Chain Management. Blockchain can streamline this process “Using smart contracts, where the terms are payable upon receipt, a proof of delivery from a logistics carrier will immediately trigger automatic digital invoicing and payments through the banking system, with no analog gap between customer and supplier. The result has the potential to radically reduce working capital requirements and dramatically simplify finance operations, with a direct impact to the bottom line.”

The Elephant in the Room: Maersk and IBM

It’s impossible to talk about the impact of blockchain on global supply chains without addressing January’s big announcement.

Maersk and IBM are launching a yet-to-be named joint venture to use blockchain technology to make the global supply chain more efficient and secure. (The companies have been working together for several years; this merely formalizes the new company.) The new company initially plans to commercialize two core capabilities:

• A shipping information pipeline will provide end-to-end supply chain visibility and enable everyone involved in managing a supply chain to securely and seamlessly exchange information in real time.
• Paperless trade will digitize and automate paperwork.

Various partners have piloted the platform, including DuPont, Dow, Tetra Pak, Port Houston, the Customs Administration of the Netherlands,  and U.S. Customs and Border Protection. According to IBM and Maersk, future partners will include General Motors and Procter & Gamble, among others.

Blockchain supply chain: Disruptive and transformational

These examples only touch on blockchain’s potential to transform the way we distribute goods. As a recent TechCrunch article put it,

“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.”

We couldn’t say it any better.