The buzz of blockchain technology in the news these days makes it sound like an efficient alternative to address business problems. In this blog, we assess blockchain supply chain development, including benefits, crucial aspects, use case, and network types.
Initially, blockchain provided frameworks to facilitate transactions with bitcoin without any intermediary involvement. This characteristic of blockchain technology remodels transaction mechanisms of not only digital currencies but also a variety of information storage and sharing. Essentially, it highlights the potential to boost the productivity and profitability of most businesses, if not all.
We aim to provide you with a better understanding of what blockchain technology is all about. We find out how it saves us time to learn, test, and analyze the value of operations.
Blockchain is a technology that, with no intermediation of a trusted central entity, can allow validated data communication across most players involved in a supply chain. It can improve transparency across a supply chain by verifying and adding data in real-time. Essentially, a blockchain is a technology that enables individuals who do not know each other to trust a shared ledger of events, according to the Bank of England.
Also, Read | What is Blockchain Technology and How Does it work
Features it provides are product traceability, fast time-stamped transactions, a distributed ledger that is censorship-resistant, and more. Its potential value drivers include increased operational supply chain efficiency and transparency, lowered risk of fraud and grey market trading, enhanced control over the management of outsourced contract management, and more. RFID, sensors and IoT applications, AI and machine learning, existing ERP, EDI, etc., systems, distributed databases, cloud-based solutions, and more technology integrations are feasible.
An established shipping firm piloted blockchain technology for shipment tracking. It enabled consumers, sellers, and officials around the world to track various information goods delivered to them. Before arrival, products travel across borders and authorities. Subsequently, it leads to managing reviews and approvals from up to 30 parties. It results in creating a large amount of paperwork and creating opportunities for fraud at several points in the process. Thus, it results in the loss of billions of dollars in maritime trade each year.
The shipping company initially cooperated with customs authorities. With this collaboration, it simplified the approval process of transactions and approvals by maintaining a distributed yet secure record. The solution reduced the time taken to transport goods. It means that transactions can settle from more than a week to less than one day or even seconds. It can reduce shipping administrative and logistics timelines by more than 85%. Developing similar use cases of blockchain in shipping logistics and supply chain can reward all stakeholders.
To strengthen supply chain transparency of the world’s second-largest traded commodity, coffee beans, a startup can begin developing with a private blockchain solution. It can employ a shared, decentralized real-time digital transaction protocol that records immutable data of transactions and further facilitates all permitted parties to access those records in real-time. When coffee beans advance through the supply chain touchpoints, it contributes to improving end-to-end transparency and ensuring that farmers get their fair-trade share.
For diamond digital certifications and prevention of illegal tampering with supply chain data, a logistics company can launch a permissioned/consortium cloud-based blockchain solution with platforms like Hyperledger projects and Enterprise Ethereum. It can hold diamond certification containing specifications and standards to ensure that they are ethically sourced.
However, false certificate reports and insurance claims can always disrupt the protections put in place. The company can decide to use a range of distinctive features to produce exclusive diamond IDs, including color and transparency, to address the challenge. The blockchain solution will render the supply chain data immutable and secure while ensuring the needed credibility for the certification process between diamond certification houses and global diamond suppliers with smart contracts. The company can successfully digitize more than a million diamonds with blockchain and smart contracts for secure and efficient storage, trade, and exchange.
Provenance tracking (tracing products across a supply chain) within the pharmaceutical industry emerges as another potential use-case for blockchain healthcare app development.
During the production and distribution process, monitoring of pharmaceutical ingredients is challenging. It further faces intensified challenges from prevalent and lucrative counterfeit drug operations around the world.
Deloitte’s initiative Rubix identified three primary use cases of blockchain in pharmaceuticals. They include its development across the drug production cycle, distribution and handling from producer to end-user, and regulatory and consumer safety compliance. Blockchain establishes a framework that ensures drug traceability, from production to end-users. It also precisely identifies the point where the supply chain breaks down.
When combined with technologies like sensors, RFIDs, machine learning, and its potential explode. Then, it not only can minimize annual losses of $200 billion but also to improve public safety and avoid some of the reported counterfeit medicine fatalities of one million while adhering to regulatory and consumer safety requirements.
With platforms like EOS and Ethereum, a blockchain forms a decentralized network with no central authority and thus low-cost transactions. It ensures record validity using resource exhausting consensus mechanisms like Proof-of-Work (PoW) or Proof-of-Stake. It enables everyone to join, read, and write on the network with an internet connection without requiring permission. Most of the miners reach an agreement to check the authenticity of the transaction record. Records remain distributed across all members of the network with access to a copy of the complete information.
It is a type of quasi-centralized network. The members of a consortium built with blockchain platforms like Hyperledger BigchainSB manage the record of the validity of transactions. A hybrid network is accessible on a permission-only basis. Only selected participants may make modifications. The consortium uses standards for verification of transactions. Records remain distributed across the consortium. The cost of transactions depends on the consensus mechanism decided by the consortium.
Preferable for enterprises, private solutions built with platforms like Corda and Multichain use a central authority that serves as a trusted intermediary to monitor and maintain record authenticity. Other features like immutability, transparency, and security remain intact. Access is available upon authorized permissions given by the controlling centralized authority. A central authority use notaries to reviews transactions. The central authority stores all documents and determines the cost of transactions as per requirements.
The argument between what is feasible to use between private/consortium and publicly accessible blockchains comes down to the company that has to use them. It essentially depends on specific business requirements. Hence, there is no straight cut answer to the issue. Moreover, the industry is still evolving. Instead of what is best for everyone else, companies must focus on what they specifically need. So, the decision on whether to use Public or Private Blockchain heavily relies upon the specific use case, functionality, and the organizational needs in particular.
Oodles is a blockchain software and solutions development company. With blockchain integration with existing supply chain systems, our experts make the supply chain of any business transparent, sustainable, secure, and stable.