Blockchain and Supply Chain Management: A Quick Explanation

What is blockchain?

Imagine an outbreak of salmonella that may be associated with the mangoes you sell. How much time should it take for you to find out where, exactly, this mango came from?

With blockchain technology, Walmart was able to figure it out in 2 seconds. (Note: they did not have a salmonella outbreak.)

A plethora of news articles and videos have popped up on my newsfeed recently about how blockchain will improve supply chain management. The technology is generally associated with crypto currencies, but its characteristics may prove useful to industries where supply chain tracking is paramount to quality control.

So what is it, and why is it so exciting?

Blockchain: A Simple Definition

Blockchain essentially puts a digital signature on the product, and anyone in the supply chain can access its digital ledger at any time. As a result, it holds every party accountable for their step in the supply chain.

No one can hide or brush mishaps under the rug because everyone in the supply chain can point to that step and say “There’s where the change occurred” or “That’s where the problem started.”

Blockchain Infographic
With blockchain technology, companies can’t easily hide bad business practices, like using raw materials produced by slave labor, or maintaining sub-standard facilities for refrigerating produce. The blockchain holds everyone accountable.

The catch, however, is that everyone needs to be on board with using blockchain applications, from source to storefront.

Are There Downsides to Blockchain?

Of course there are. Blockchain’s primary obstacle is laziness – people don’t like change.

If the companies that grow, process, and sell the wheat for your bread use the same application, but the transportation company doesn’t, there will be a gap in the blockchain. As a result, the technology is useless in its ability to streamline supply chain management and enforce accountability.

broken blockchain

But what if blockchain produces a digital signature that can be read by all applications, like a UPC?

The Forbes article from 2017 states it perfectly:

First, every crate, shipment, or individual package of produce must be uniquely identifiable. The global standards body, GS1, is leading the way in serialization efforts, offering unique codes called GTINs that can be applied to products for these purposes. Second, that participants in the supply chain must transfer the custody of these products every step of the way.

If and when GS1 is able to develop a way for blockchain codes to be assigned to any item in the supply chain, how long will it take for applications to read them?

A farmer may be able to assign a blockchain code to a batch of wheat, but then when the bags of finished flour are boxed and moved by the distributor, the company receiving the shipment doesn’t have a way to mark itself in the blockchain, hence the hiccup noted in the second half of the dilemma presented in the Forbes article.

Final Thoughts

In order for blockchain to be effective, every step of the supply chain has to be on board with the process. It is certainly an exciting technology, and we should encourage each other to hold ourselves accountable with this incredible step in supply chain management. Recalls can be addressed quicker, modern slavery can be combated, and we can consume safer products.


Sources

Africa Could See the World’s Fastest Blockchain Growth by Christina Comben, 2 June 2018 – Null TX

How Blockchain will Transform the Supply Chain and Logistics Industry by Bernard Marr, 23 March 2018 – Forbes

Blockchain Venture Wants to Change African Farming Forever by Joe Easton, 28 November 2017 – Bloomberg

Why Big Business Is Racing to Build Blockchains by Robert Hackett, 22 August 2017 – Fortune

Block Commodities in the Media

Author: Sterling Schuyler

Sterling writes to put broad statements into real context. She enjoys conducting in-depth research in order to bring factual integrity to any topic, especially anything about food. Whether it's the ethics of food science or the tale of a family-owned business, Sterling loves to breathe life and substance into these stories. In her downtime, she enjoys gardening, playing board games and video games, and writing for her personal blog The Asian Craving.

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