The ubiquity of blockchain technology spans various industries including supply chain and logistics that address business activities related to production and distribution of products. In addition to the movement of physical goods, the movement and exchange of information is synonymous with supply chains.
ICT and the Supply Chain
The supply chain is a business environment of connected activities centred on planning, coordinating, and controlling of material, information, and financial flows that originate from suppliers and terminates at customers. Using information and communications technologies (ICTs) to improve information flows, businesses have enhanced efficiency, effectiveness and competitive advantage. An earlier study on the ICT applications and the supply chain identified three primary roles – supply chain coordination, collaboration and connectivity through business process integration, information sharing and exchange and networking respectively.
Applications of Blockchain in Supply Chain
With ICTs prevalence in supply chain applications, blockchain technology will enable inter-organisational business processes (process-driven applications) as well as tracking the movement of goods and information. In global supply chains with multiple members located in different markets, trust and access to enterprise information are currently limiting factors. These limitations are addressed by the blockchain’s inherent characteristics – distributed, decentralized, immutable, and encrypted which invariably enhance supply chain coordination and collaboration.
In essence, blockchain will document and create a permanent history of each supply chain transaction and enable those with access to have shared consistent information from manufacture to sale.
Supply chains in the developed world are already using blockchain technology, and experts suggest blockchain could become a universal “supply chain operating system” before long. Some noteworthy blockchain use cases are briefly summarized.
Using blockchain technology, Provenance.org provides customers, businesses, and the general public detailed information about products from inception to finished goods. They track coffee, cotton and other agricultural produce from the farm to the retailers’ shelves to ensure and promote transparency and wholesome business practices throughout the supply chain.
Wal-Mart in partnership with IBM is using blockchain technology to ensure traceability and transparency through its entire food supply. Everledger is using blockchain to track the origin and movement of diamonds and other precious stone by jewellers to restrict the distribution of “blood diamonds”. Everledger is also using blockchain to track wine distribution, over 20% of wines are found to be fake or wrongly labelled, so with blockchain technology Everledger is bringing transparency and accountability to the industry.
Maersk is using a blockchain to manage shipping transactions and monitor the movement of containers to enhance the transparency of shipping documents among trading partners, government agencies and other ecosystem actors.
In spite of these applications and benefits, universal blockchain adoption in supply chain management functions can only be successful with changing business attitudes as regards information sharing. Other requirements include the development of governance frameworks and institutions, standards and agreements to support interoperability across private and public blockchains. Also required is clear legislation especially as it relates to the shipping routes and maritime law and commercial codes.
Contributors to this article are; Dr. Olayinka David-West, Lagos Business School, and Tunde Ladipo, a Blockchain enthusiast.
CALEB OJEWALE
