Global supply chains involve many complex and fragmented processes across multiple parties. These processes are often handled manually and are facilitated in archaic ways such as using fax machines to transfer data. Because of this, when products and documents move across the supply chain it is not unusual to see unexpected delays and errors along the way. By utilizing an immutable and shared ledger, a blockchain is well suited for improving the many inefficiencies we see today.
Three things I am excited about:
1. Digitization of Document Storing and Processing: Instead of using email, fax machines, or other physical processes unqiue to each party, all relative partcipants would transact on one shared ledger. The letter of credit, issued certifcates, bill of lading, and payments would all be automated and validated by permissioned parties during the course of the transaction. This would likely result in four key benefits.
• It would enable real time updates. Shipping information and product status would be available 24/7 to all relevant parties.
• It would create network neutrality. Anyone could plug in and out of the system and it negates the need for each party to maintain their own ledger.
• It would result in fewer delays. An automated environment would replace physical document storing.
• It would result in fewer errors. There is no need to rekey information and once it's validated in the blockchain it can't ever be changed.
2. Product Provenance: This is an issue that is often overlooked when talking about supply chains. A blockchain would enable far greater levels of transparency across the supply chain process. This would be especially important for consumers purchasing high valued goods or new medications where it's important to know the exact life cycle of the product being bought. The problem in many companies is that they’re managing different vendors across a horizontal supply chain who don’t share or use the same database and infrastrucutre. By utilizing the blockchain, we can create a single source of truth across these non-trusting entities.
3. IoT: This part is a bit more futuristic but is exciting to talk about and envision developing. The use of computer chips and sensors inside shipping containers will enable buyers and sellers to monitor the condition of their product in real time 24/7 as it moves across the supply chain. These products often travel through unfavorable conditions and are either damaged or compromised as a result. Using this data will allow buyers and sellers to set up smart contracts that will autonomously execute predetermined conditions agreed upon by the relative parties. Because smart contracts run on the blockchain, they run exactly as programmed without any possibility of censorship, downtime, fraud or third party interference.
A smart contract could be something as simple as, "if shipping container 'x' records a temperature greater than 'y', a payment of 'z' will be allocated to party 'w'. These conditions would execute on the blockchain without any human interaction. On top of this, when the shipment is received at port, it could autonomously bid on a transport to its final destination. The shipping container would therefore be its own computer as well an autonomous digital wallet enabling machine to machine payments.
This technology is in its infancy and will likely take time to adopt. The enterprise however needs to be prepared. The convergence of big data, artificial intelligence, robotics, and blockchain technology will have a profound impact on what the future looks like across multiple industries. Technology doesn't move in a linear fashion, it moves exponentially. The companies who best understand this will be the ones who come out ahead in the future. Adapt or die.
By Philip Francis: Futurist, Bitcoin Enthusiast. Lover of all tech and markets. Swedish/US Dual-Citizen. Lets change the world together.