How Blockchain Can Re-Invent the Global Supply Chain

After it emerged in 2008, the technology behind the world’s most popular crypto-currency, Bitcoin, took to court on the sidelines, attracting attention mostly from startups and the financial services sector. However, it has only recently started to receive a lot of attention as companies are slowly realizing that it can be valuable for many other things besides tracking fees.

Simply put, a blockchain is a distributed ledger that organizes transactions into blocks. Each block is chained to its first, using sophisticated mathematics, until the first transaction. Entries are permanent, transparent, and searchable, enabling community members to view transaction histories in their entirety. Each update consists of a new “block”, added at the end of the “chain”-a structure that makes it difficult for anyone to change records at a later stage. The ledger allows information to be recorded and shared between large groups of unrelated companies and all members must collectively validate any updates – which is in everyone’s interest.

To date, a lot of attention and money has been spent on financial application for technology. However, a similarly promising test case exists in global supply chain relationships, whose complexity and diversity of interests impose the exact types of challenges this technology seeks to address.

A simple application of the blockchain paradigm in the supply chain can register the transfer of items in the ledger, because the transactions identify the parties involved, as well as the price, date, location, quality and condition of the product and anything else. information that may be relevant to supply chain management. The cryptography -based and unchanging nature of transactions make it almost impossible to compromise the ledger.

Today, many startups and corporations are deploying the blockchain to reinvent their global supply chain and run their businesses more efficiently:

1. For Maersk, the world’s largest shipping company, the challenge is not to keep track of the familiar rectangular shipping containers that sail the world aboard cargo ships. Instead, it revolves around mountains of papers attached to each container. A container may require stamps and approval from up to 30 parties, including customs, tax officials and health authorities, spanning 200 or more interactions. While containers can be loaded onto a ship in minutes, a container can be left in port for days because a piece of paper is lost, while the contents are damaged. The cost of moving and tracking all of these papers is usually equal to the cost of physically moving the container around the world. The system is also rife with fraud because the valuable bill of lading can be altered, or copied, allowing criminals to siphon items or circulate counterfeit products, leading to billions of dollars in fraud. sea ​​every year.

Last summer, Maersk sought cooperation from customs authorities, freight forwarders and producers filling containers. It has begun running initial trials of a new digital shipping ledger with these partners, for shipping routes between Rotterdam and Newark. After signing a document, customs authorities can immediately upload a copy of it, with a digital signature, to everyone involved – including Maersk itself and other government authorities – it appears to be complete. If there are disputes later, everyone can go back on the record and be confident that no one is changing it in the meantime. The cryptography involved also makes it difficult for virtual signatures to be forged.

The second test traced all paperwork related to a container of flowers moved from the Port of Mombasa, in Kenya, to Rotterdam, in the Netherlands. While both trials went well, Maersk followed suit by tracking containers with pineapples from Colombia, and mandarin oranges from California.

2. Like most retailers, Wal-Mart, struggles to identify and eliminate food that needs to be remembered. If a customer is ill, it can take several weeks to identify the product, shipment and seller. To address this, it was announced last year that it would begin using the blockchain to record and log the origin of products – important data from a receipt, including suppliers, details of how and where the food was grown. and who is examining it. The database extends the information from the pallet to the individual package.

It provides the ability to instantly find out where a dirty product is coming from in minutes versus days, as well as capture other important attributes to make an informed decision about how to clean it. flow of food.

Wal -Mart, has already completed two pilot programs – the transfer of pork from Chinese farms to Chinese stores, and the production from Latin America to the United States – and is now confident that a finished version can be installed for several years.

3. BHP relies on vendors at almost every stage of the mining process, contracting with geologists and shipping companies to collect samples and conduct analyzes that drive business decisions involving multiple parties. distributed throughout the continent. Vendors typically track rock and liquid samples and analyze using emails and spreadsheets. The missing file can cause huge and costly headaches because the samples can help the company decide where to drill new wells.

BHP’s solution, which started this year, is to use the blockchain to record the movements of wellbore rock and fluid samples and better ensure real-time data is generated during delivery. Decentralized file storage, multi-party data access and immutability as well as easy access are all aspects that can improve its supply chain.

BHP now requires its vendors to use an app to collect live data-with a dashboard and options on what to do to master their respective jobs. A technician taking a specimen can include data such as time of collection, a lab researcher can add reports, and everything is immediately visible to everyone with access. No more missing samples or messy messages. While some process elements are similar, the new system is expected to drive internal efficiency while allowing BHP to work more effectively with its peers.

Currently, in most early deployments, blockchain runs similar to today’s systems in companies – often older databases or spreadsheets such as Microsoft’s Excel. The hardest part is creating new business models. Deploying blockchain enterprise-wide means that companies often have to scrap their business processes and start from scratch. An effort not for the faint of heart.