The opportunities for supply chain management improvement through the use of blockchain are legion.
What is supply chain but a series of transactions contingent upon each other, a process where tracking shipments and authenticating products is vital, and where delays or obstructions need to be worked around quickly and efficiently?
This is exactly what blockchain does for supply chains. It makes them more efficient, reliable, transparent, and secure. It reveals problems earlier and can even solve problems as they occur. It can be an immutable record of any data which a buyer of a product might want, as granular or as broad as desired.
For good reasons and bad reasons, most everyone has now heard of blockchain. But many people have had their basic opinion formed - and tainted - by headlines announcing the meltdowns of Celsius, Voyager, and most spectacularly, FTX. Accompanying these headlines are the related crash in the price of bitcoin and all cryptocurrencies.
And yes, blockchain, cryptocurrencies, and bitcoin are all related. But they are also very different. Blockchain is the technology underneath bitcoin and cryptocurrencies. It can be put to use in ways that have virtually nothing to do with cryptocurrencies.
The term blockchain is not particularly illuminating for someone learning about it from a non-IT perspective. A good way to start thinking about blockchain is to refer to it as a distributed ledger. That is, a record of transactions simultaneously shared among multiple users, but without the use of a centralized database.
That basic description is unlikely to set people’s hearts racing. But what blockchain is, however, does not immediately explain what a blockchain does. And what a distributed ledger does, however, is actually very exciting.
A distributed ledger presents and structures data to multiple parties simultaneously. But it can also be a platform that is programmed to interact with the data and cause other things to happen as a result of the data input.
Imagine a piece of data coming in – it doesn’t matter what the origin is, or how that data is obtained – for example, that something has hit a particular temperature. When that temperature is hit and that data point goes onto a blockchain, then the pre-programmed blockchain sends out an instruction for the next thing to happen.
Perhaps it is the next step in an automated manufacturing process. Perhaps it is a safety measure. Or anything else. The point is, blockchain can automate the next thing to happen immediately after a condition is met. It eliminates the need for a human being to take a measurement, and then go perform the next thing in the sequence.
So blockchain is a tremendous tool for efficiency, automation, elimination of the potential for human error, and paperwork reduction. In this way, blockchain has a forward-looking function.
Blockchain is also a more secure way to store information than a centralized database since every computer that participates in blockchain stores the entire chain of data. So, unlike a centralized database, data in a blockchain is not subject to a single point of failure.
And because data on a blockchain is permanent and immutable, blockchain can also be thought of as a community audit log. So, it has a backward-looking function, as it is a permanent record of transactions. Any enterprise which would benefit from a permanent audit log, an immutable record of when things happened including time stamps, might benefit from blockchain.
Supply chain is enhanced by greater transparency, security, collaboration, and efficiency!
This is blockchain!
This is the future!