Challenges in humanitarian supply chains that blockchain could help tackle
It’s been a busy month since my last post and things are really moving forward. We have conducted a design thinking workshop with the DFID Supply Chain team and had some really exciting exploratory conversations with our Advisory Group which includes representatives from key organisations in the Humanitarian Sector.
This has lead us to identify a set of challenges in humanitarian supply chains that blockchain technology could potentially help tackle. A summary below.
Lack of end-to-end visibility along the supply chain
Humanitarian supply chains consist of multiple donors, agencies, NGOs and distributors. As a result, it is often challenging for the different participants to get a complete picture of where supplies are and how long it would take to deliver them, as well as how efficiencies could be made and supplies shared. Moreover, supply chains are often assembled in an ad-hoc manner in the wake of a disaster — something which adds further complexity and urgency.
High logistics costs
Despite a movement towards an increased use of cash transfers for humanitarian responses, procurement and logistics often represent a substantial percentage of the cost, including creating and governing contracts between organisations. Often, effort is duplicated when participants involved in transactions all update their own records and ledgers to reflect one and the same transaction.
Access to accurate information
How do you deliver the right item, at the right time, and to the right location if you cannot be sure that you can trust the information you are receiving? Humanitarian response is hampered by a lack of real time and accurate information about stocks of humanitarian goods at the different points along the chain. This has an impact on the creditability and trust of the data shared, and leads to time-consuming manual reconciliation activities (known as double-checking, to you and me).
Lack of transparency resulting in corruption and fraud
There is a risk that limited transparency in the supply chain results in corruption and fraud, a disrupting factor in delivering humanitarian aid. One shared ledger reduces the opportunities for dishonesty by unscrupulous parties.
How could blockchain help?
1.Maintaining operational readiness with supply availability and reducing unfulfilled demands
Blockchain can allow real-time status tracking of supplies in the chain. When used with data analytics, this could be used to ensure operational readiness to meet current and future supply demands while keeping inventory to minimum levels.
2.Transparency for knowing the state and location of a product
• The provenance and lifecycle of a specific supply could be maintained in the blockchain ledger, allowing for increased transparency of the asset’s location.
• Transfer of supplies between parties in the supply chain could be logged in the blockchain, including important supply information such as dates, location, size, quantity, which would be available in the distributed ledger.
• Transfers of ownership could be authorised by relevant actors in the network, without putting all trust into one single organisation.
3.Sanitise information down the supply chain
• A permissioned blockchain network would allow for controlled access to information, restricting the information each individual supply chain participant can access, without the need for separate ledgers.
4.Smart contracts could reduce administrative burden and minimise risk for disputes
• Transactional logic could be codified and potentially automatically executed when contract milestones are reached and registered.
So what next? Now we have identified a number of potential use cases (on a high level), the challenge for the team is to decide which one we can develop into a pilot. This will be small at first, but it has to have the potential to scale. No easy task but an exciting challenge to face in the New Year!