How Blockchain Can Re-Invent the Global Supply Chain

Since its introduction in 2008, the technology behind the world’s most infamous cryptocurrency, Bitcoin, has been on the verge of collapse, attracting the attention of startups and, in particular, the financial services industry. Lately, however, it has attracted a lot of attention, and companies are gradually realizing that it can be useful for many other things besides tracking payments.

Simply put, blockchain is a distributed registry that sorts transactions into blocks. Each block is connected to the previous block using advanced math before the first transaction. Views are permanent, transparent, and searchable, allowing community members to view the entire transaction history. Each update creates a new “block” that is added to the end of the “chain” – a structure that makes it difficult to edit records at a later stage. The registry allows information to be recorded and shared between large groups of non-connected businesses, and all participants must collectively verify updates that are in everyone’s interest.

To date, a lot of attention and money has been spent on financial applications of technology. However, an equally promising benchmark is the relationship in the global supply chain, whose complexity and diversity of interests are precisely the problems that this technology seeks to address.

Simply applying the blockchain paradigm to the supply chain may be to register the transfer of goods in the main book, as transactions will identify the parties involved, as well as price, date, location, quality and time. Product status and everything else. other information related to supply chain management. The unchanging nature of transactions based on cryptography will make compromising the ledger almost impossible.

Now many startups and businesses are using blockchain to reinvent their global supply chain and manage their business more effectively:

1. For Maersk, the world’s largest shipping company, the challenge is not to follow the usual rectangular shipping containers that travel the world on cargo ships. Instead, he bypasses the mountains of documents that go with each container. One container may require printing and permits from 30 parties, including customs, tax authorities and health authorities, which cover at least 200 interactions. While containers can be loaded onto the ship in minutes, the container can stay in port for several days because a piece of paper is lost and the cargo inside is spoiled. The cost of moving and tracking all of these documents is often equal to the cost of physically moving the container around the world. The system is also fraught with traps because valuable bills can be forged or copied, allowing criminals to transfer goods or release counterfeit goods, resulting in billions of dollars in fraud at sea each year.

Last summer, Maersk sought help from customs, forwarders and manufacturers who fill the containers. Together with these partners, he began the first tests of a new digital book of shipping on sea routes between Rotterdam and Newark. Once the document was signed, Customs could immediately download a copy of it with a digital signature so that all parties involved, including Maersk itself and other government agencies, could see it. If there were any arguments afterwards, anyone could come back and believe that no one has changed it yet. The cryptography used also makes it difficult to forge virtual signatures.

The second test carried out all administrative procedures related to the delivery of a container of flowers from the port of Mombasa in Kenya to Rotterdam in the Netherlands. Because both trials were successful, Maersk chose containers of pineapples from Colombia and tangerines from California.

2. Like most sellers, Wal-Mart has difficulty identifying and removing products that need to be recalled. When a customer gets sick, it can take several weeks to identify the product, delivery and seller.

This gives it the ability to immediately determine where the infected product comes from in minutes rather than days, and to write down other important attributes to make an informed decision about the food flow.

Wal-Mart has already completed two pilot programs – transporting pork from Chinese farms to Chinese stores and Latin American products to the United States – and is now confident that the full version can be assembled within a few years.

3. BHP relies on suppliers at almost every stage of the mining process, contracting with geologists and transport companies to collect samples and conduct analyses that lead to business decisions involving many stakeholders on all continents. These suppliers typically track rock and liquid samples and analyze them using emails and spreadsheets. A lost file can cause serious and costly problems as samples help the company decide where to drill new wells.

BHP’s decision, which debuted this year, is to use the blockchain to record the movements of rock and fluid samples during drilling and to better protect real-time data during delivery. Decentralized file storage, data collection involving many stakeholders and immutability, and instant availability are all aspects that will improve the supply chain.

NOW BHP has instructed its suppliers to use the real-time data collection app – with a control panel and significantly simplified options for their respective tasks. The technician who selects the sample can add data, such as the time of collection, the lab researcher can add reports, and everything immediately becomes visible to anyone who has access. No more lost samples or restless messages. While some elements of the process remain the same, the new system should improve internal efficiency and allow BHP to work more effectively with its partners.

Blockchain currently works alongside current business systems in most initial implementations – often with older databases or spreadsheets such as Microsoft Excel. The hardest thing will be to create new business models.