Home Business How can Blockchain reinvent the global supply chain?

How can Blockchain reinvent the global supply chain?

After its appearance in 2008, the technology behind the world's most famous cryptocurrency, Bitcoin, has been courting at the margin, primarily attracting the attention of startups and the financial services industry . However, it has recently started to receive a lot of attention, as companies realize that it could be useful for many other things besides the tracking of those things. payments.

In simple terms, a blockchain is a large, distributed book that sorts transactions into blocks. Each block is chained to the one preceding it, using sophisticated mathematics, until the first transaction. Entries are permanent, transparent and searchable, allowing members of the community to view transaction history in its entirety. Each update is a new "block", added at the end of the "chain" – a structure that makes it difficult for anyone to edit the records later. The general ledger allows you to record and share information between large groups of unrelated companies. All members must collectively validate all updates, which is in the interest of all.

To date, much attention and money has been devoted to the financial applications of technology. However, an equally promising test case is the global supply chain relationships, whose complexity and diversity of interests are exactly the kinds of issues that this technology seeks to address.

A simple application of the blockchain paradigm to the supply chain might be to record the transfer of goods to the general ledger, as the transactions would identify the parties involved, as well as the price, date, location , the quality and condition of the product, etc. information that would be relevant to the management of the supply chain. The immutable nature of transactions, based on cryptography, would make it almost impossible to compromise the general ledger.

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

1. For Maersk, the largest shipping company in the world, the challenge is not to follow the well-known rectangular shipping containers that navigate the world on cargo ships. Instead, it bypasses the mountains of paperwork associated with each container. A single container may require stamps and approvals of up to 30 parties, including customs officials, tax authorities and health authorities, across 200 or more interactions. While containers can be loaded onto a ship in minutes, a container can be held in port for several days as a piece of paper disappears as the goods inside spoil. The cost of moving and tracking all these documents is often equal to the cost of physically moving the container around the world. The system is also subject to fraud because the valuable bill of lading can be falsified or copied, letting criminals siphon goods or pass counterfeit products, generating billions of dollars in maritime fraud every year.

Last summer, Maersk sought the cooperation of the customs authorities, freight forwarders and producers who fill the containers. It started testing for the first time a new digital ship register with these partners, for the navigation routes between Rotterdam and Newark. After signing a document, the customs authorities could immediately download a copy, digitally signed, so that all concerned – including Maersk and other government authorities – could see that the document was complete. If there were any disputes later, everyone could go back to the minutes and make sure no one had changed meanwhile. The cryptography in question also makes it difficult to falsify virtual signatures.

The second test followed all the documents relating to a container of flowers transferred from the port of Mombasa, Kenya, to Rotterdam, the Netherlands. As both trials went well, Maersk then tracked pineapple containers from Colombia and mandarins from California.

2. Like most merchants, Wal-Mart has trouble identifying and eliminating foods to recall. When a customer gets sick, product identification, shipping and the provider may take weeks. To remedy this, he announced last year that he would start using the blockchain to record and record product origins – crucial data from a single receipt, including vendors, details of how and where food was produced and who inspected it. The database extends the information from the pallet to the individual package.

This gives him the ability to immediately find where a contaminated product comes in minutes to days, as well as to grab other important attributes to make an informed decision about food flow.

Wal-Mart has already completed two pilot programs – transferring pork from Chinese farms to Chinese stores and Latin American products in the US – and is now confident that a finished version can be developed. from here a few years.

3. BHP relies on suppliers at almost every stage of the mining process, contracting with geologists and transportation companies to collect samples and conduct analyzes that lead to commercial decisions involving multiple parts distributed on several continents. These suppliers typically keep track of rock and fluid samples and analyzes with emails and spreadsheets. A file loss can lead to significant and costly headaches because the samples help the company decide where to drill new wells.

BHP's solution, which began this year, is to use the blockchain to record the movement of rock and wellbore fluid samples and better secure the real-time data generated during delivery. Decentralized file storage, multiparty data acquisition and immutability, as well as immediate accessibility, are all aspects that will improve its supply chain.

BHP has now asked its suppliers to use an application to collect data in real time – with a dashboard and options on what to do that are very simplified for their respective tasks. A technician taking a specimen can attach data such as the time of collection, a lab researcher can add reports, and everything will be immediately visible to everyone who has access to it. No more lost samples or frantic messages. Although some elements of the process are the same, the new system should allow internal efficiency while allowing BHP to work more effectively with its partners.

For the time being, in most early deployments, blockchain works in parallel with current corporate systems, often older databases or spreadsheets, such as Microsoft Excel. The hardest part will be creating new business models. Enterprise-wide blockchain deployment means that companies will often have to abandon their existing business processes and start from scratch. An effort not for the shy.

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