Download this article in PDF format.
A distributed database shared among the nodes of a computer network, blockchain stores information electronically in digital format. Best known for the role that it plays in cryptocurrency systems like Bitcoin, blockchain guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.
Put simply, blockchain is an open and censorship-resistant database model, secured by encryption and decentralization. “Blockchain records information in blocks on a shared ledger,” forkast reports, “storing a synchronized copy of it on all the systems participating in the network, hence assuring its immutability (i.e., unchanging over time or unable to be changed).”
Outside of the investment world, blockchain is being applied to many different transactions and processes. The supply chain and logistics sector has already produced numerous successful use cases of blockchain, and those examples continue to proliferate—so much so that Research Dive is predicting a 57.4% compound annual growth rate (CAGR) for blockchain in supply chain over the next six years.
Big Growth Ahead
By 2028, Research Dive expects the global blockchain in supply chain market to reach $14.88 billion and cites the COVID-19 market impacts as one the key drivers of this double-digit growth. Concurrently, advanced technologies like machine learning and artificial intelligence are increasingly being adopted by companies that want to better navigate the crisis while also planning ahead for the future.
Research Dive says there’s also been a “considerable surge” in the volume of daily transactions and data flow in logistics and supply chain, where organizations in many industry sectors are looking to blockchain for help streamlining and automating processes. Some of the larger organizations that make blockchain solutions for these and other needs include Oracle, IBM, Huawei, Guardtime and Interbit.
In one example of how companies are stepping up to the plate and developing new blockchain applications for the supply chain sector, Teck Resources Limited and DLT Labs are using blockchain technology to trace responsibly produced germanium from the mine to the customer. According to Yahoo! Finance, this is the first such use of blockchain to trace this critical mineral. This pilot will support Teck’s Sustainability Strategy goal to develop a “product passport” that provides traceability into the raw materials supply chain.
“Teck is proud to be advancing the first use of blockchain technology to trace the critical mineral germanium from the mine all the way to the customer,” Teck’s Marcia Smith told Yahoo! Finance. “Ensuring the environmental and social responsibility throughout the metals production chain provides our customers and downstream consumers with the confidence that their products are sourced responsibly.”
IBM is also harnessing the power of blockchain technology to deliver verifiable COVID-19 vaccine data and health passes, forkast reports, and infusing more speed, accountability and transparency into the supply chain. By using the IBM blockchain, for example, distributors gain real-time visibility of the process, while manufacturers can improve their recall management.
Fixing Broken Supply Chains
With the world’s supply chains still squarely in disruption mode, some companies are calling upon blockchain to help them streamline these vital, global networks and the related financial transactions. In “How AI and Blockchain Could Fix Broken Supply Chains,” Andreea Minca discusses how even seemingly minor supply chain issues can have a negative, knock-on financial impact on trading partners, with firms delaying payments because their own customers are paying late.
“The pay-on-delivery model can lead to canceled or delayed shipments which can in turn lead to bankruptcies,” Minca writes. “Researchers are currently working to develop methodologies to identify vulnerabilities in global supply chains and to understand their trade credit contagion risks. The goal is to make these systems more robust overall.”
Minca says blockchain brings the promise of using high-quality data to analyze supply chain dependencies. Using real-time data, transparent verification carried out by multiple parties and smart contracts, blockchain could reduce the time it takes to resolve supply chain disputes while also streamlining recordkeeping and payments.
“Real-time recordkeeping, the traceability of transactions, and the immutability of blockchain can all help supply chains become more efficient,” Minca writes, noting that there are still roadblocks to work through before we see blockchain becoming more commonly used in supply chain applications and environments.
