Aerial top view of container cargo ship in Laem Chabang, Chon Buri, Thailand
As enterprise blockchain usage finds its feet, some of the most advanced and active solutions from the technology are coming in the supply chain sector. It is unsurprising, as the design of blockchain is comparable to a supply chain, and on the other side of things, the supply chain ecosystem is massive, and in need of upgrading.
Recently, in the news, there has been instances of retail giants Walmart and Target advancing their blockchain supply chain solutions. The former is focusing on track and trace of foodstuffs and pharmaceuticals while the latter is piling resources into boosting the HyperLedger Grip project.
Starbucks is also using blockchain supply chain to ensure ethical sourcing of coffee beans and Budweiser’s parent company, Anheuser-Busch InBev, is strengthening the “last mile” of their supply chain – the farmers.
It is hard to look past any major company with a complex supply chain and not see some sort of blockchain interest. The reasons for this are quite basic; the supply chain ecosystem is worth trillions, but also severely inefficient and in desperate need of an upgrade.
Oldest and largest
Entrepreneur and CRO of ShipChain, Sami Rusani, has worked with companies such as VISA, Heineken, Mercedes, Sony, Virgin, and has been working with blockchain technology in transport and logistics for a couple of years now. He spoke to Forbes about this drive from major enterprises into blockchain supply chain.
Forbes: Can you explain why so many major enterprises feel that supply chain is the best, and most accessible, use of blockchain technology?
Sami Rusani: “The supply chain industry is not only one of the oldest industries in the world, it’s also one of the largest – annual revenue is more than $14 trillion globally – and it’s growing fast.”
“It’s an industry that is riddled with problems – freight tracking issues causing billions of dollars in economic loss every year, and theft of more than $30 billion worth of goods in the US every year.”
“In the pharmaceutical and food and beverage industries, we’ve seen massive domestic recalls costing millions, if not billions. A vast majority of companies say that they lack visibility and transparency to the level they want in their supply chain.”
“Blockchain technology allows for a couple of very important things – provenance and immutability, meaning you can trace data back to its true original, unaltered source, through the whole supply chain, and secure data handling.”
“The problem with centralized solutions is that there is a designated administrator who can alter data, which is impossible to do in a blockchain environment, at least if a public blockchain is used. Blockchain also solves the problem with lack of transparency with this.”
“Payments is another issue – it can take several months for companies to get paid. Putting smart contracts in charge of distributing payments can help cash flow and efficiency.”
Looking for a standard
Rusani notes that with such big players entering into the space, it must be on the right track. However, these companies are mostly experimenting currently and he is calling for standardization.
F: How is the blockchain supply chain ecosystem progressing now that there is bigger enterprise use cases with the likes of Walmart, Starvuks, Target etc. entering the waters? And will they be successful?
SR: “It’s moving forward, but it’s moving slowly, as anticipated. I think that the industry is finally seeing the benefits of the technology, and when the big corporations jump on the bandwagon, you know we’re on to something. What needs to be figured out now is an open standard, which is what we are working on. The industry still operates on some infrastructural standards that were created before computers existed!”
“The whole idea of blockchain is decentralization and disintermediation, not to create a slew of new blockchains to keep the industry fragmented. There is a big discussion on the whole public vs. private blockchain topic, and as a true public blockchain supporter – for many reasons, but security being one of the main ones – I think the industry at some point will decide on a couple of standards as opposed to everyone having their own.”
Good for all
Many businesses rely on varying levels of supply chain – from the billion dollar earners like Walmart and Starbucks to the Mom ‘n Pop stores. However, with these major corporations leading the way, they can pioneer a path for a new supply chain ecosystem for all.
F: Do you think there is a big enterprise use case for blockchain supply chain that will allow even bigger growth for the technology and allow all kinds of companies to adopt blockchain?
SR: “Absolutely – it solves a myriad of problems that the industry is currently facing. The thing that applies to the vast majority of all companies is the fact that consumers want their goods faster, cheaper, delivered home, and they want to know where they came from.”
“They also want to know that they can trust the data that they are provided with. Making your supply chain more efficient, transparent and secure is critical to keep up with e-commerce and at the rate it’s growing every year.”
F: What are the current barriers that are slowing the adoption of blockchain supply chain, and in your opinion, what needs to be done to overcome them?
SR: “Transport and logistics is traditionally an industry that’s very resistant to change. I’m still surprised at the amount of excel sheets, or even pen and paper being used! Overcoming fear of technology and the ‘don’t fix it if it ain’t broke’ model is a big one.”
“One of the largest barriers at this point is the lack of understanding of what blockchain technology is, and how it helps. It’s either being waved around as the ‘one thing that solves any and all problems,’ or just being associated with cryptocurrencies.”
“It’s not the solution for every single problem, and it’s so much more than cryptocurrencies. I think education is very important for people to understand the implications this technology has for the industry and the future throughout several industries.”
“Another barrier is the siloed data model, where few companies share any data, which makes it harder for everyone else participating in a supply chain. Take f.ex. a truck that moves product – it can have five different IoT devices tracking different things, such as temperature, GPS, humidity, fuel usage, container opens and more. These devices are sometimes owned by five different companies, and even though they’re on your truck, you don’t own the data, and sometimes you only have limited access to it! “
“Luckily, the industry leaders have recognized the need for a more collaborative environment. It benefits the industry as a whole if everyone has a more collaborative mindset, and I think that’s the key to move adoption forward.”