What combining two big concepts can do for us: Supply Chain & Blockchain

Syed Hossain
Sep 5, 2018 · 3 min read

Supply chain is defined as “the sequence of processes involved in the production and distribution of a commodity.” In the context of today’s businesses, this could mean a lot. Take Starbucks for example; supply chain in their context means the farms that grow the coffee beans, the processing facilities to which the beans are sent to, the distributors which handle shipping and handling, and the Starbucks location which will finally turn the beans into to drinkable coffee. The tracing of the complex processes and variety of stakeholders which are involved in this supply chain is not only difficult, but also challenging in terms of ensuring the highest form of integrity. Ensuring supply chain integrity is a challenge which extends way beyond coffee beans. Think pharma. Counterfeit drugs constitute a global problem today. The World Health Organization estimates that 10% of medications are counterfeit. The implications of the counterfeit drug market extend beyond just loss in sales by drug companies; these drugs are dangerous for patients.

Supply chains are multi-faceted and complex processes, making it easy for bad actors to alter integrity. In order to move towards a “future-state” in supply chain management where the highest integrity and fidelity is maintained, organizations and businesses will need innovate, pilot, and implement novel technologies which help do so. In comes Blockchain.

What is Blockchain?

Simply put, blockchain is a digital tool. Blockchain is a tool which allows us to “keep track” of “things” in a distributed ledger. This distributed ledger’s network is decentralized in nature. The “things” can refer to assets, transactions, and more (any thing or transaction which you would want to record). More on how Blockchain works can be found here.

Reliability

Imagine a hypothetical scenario where a bunch of information regarding real estate ownership and their respective digital certificates are stored in a big data warehouse. If this warehouse is damaged by some means, you’d lose the critical information stored there (assuming data was not backed up in other locations). The blockchain however, makes numerous copies of its stored information in a distributed network — which is maintained by people called miners. Miners provide computation power to the blockchain network and also maintain its integrity. They ensure the blockchain network is up and running. In exchange for doing so, they are provided with rewards (typically in the form of digital currency).

Security

Blockchain’s distributed nature makes it extremely secure. Taking the real estate example from above, we can understand how a distributed network is comparatively a lot more secure. Imagine a bad actor digitally visits (hacking) the data warehouse to change ownership of real estate. Assuming the bad actor is successful in breaching the system, he or she will have access to the central database and as a result can cause significant damage. Now, imagine the same information stored on a blockchain network. This bad actor infiltrates one copy of the information on the blockchain, then has to go through and change every other instance as well (since it is a distributed network). Doing so would require an unrealistic amount of computation power, making the bad act near impossible.

How can Blockchain Technology help with Supply chain?

Blockchain technology presents a great opportunity for tracking a variety of supply chain processes. The technology allows for a more secure method for record-keeping which allows for the supply chain processes to be maintained with high integrity. Significant work in this space has already been done. Going back to our Starbucks and big pharma examples, we see that blockchain-based supply chain management players have already emerged. Starbucks for example, announced earlier this year their plan to pilot their ‘bean to cup’ initiative with blockchain technology. GlaxoSmithKline, a global pharmaceuticals company, has partnered with Viant.io (a major player in blockchain-based supply chain management) to track intellectual property licenses, and plans to further their scope to track the supply chain of medicine.

Departing thoughts

Blockchain technology is very promising. Although it is an emerging technology when compared to cloud storage for example, blockchain has begun disrupting traditional processes in business. As developers, designers, and entrepreneurs continue to build on this technology, we will notice significant scaling capabilities. This will result in a massive migration of companies to establish business processes on the blockchain. To me, blockchain is exciting because of its technological and cultural implications.

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