Over the past few years, blockchain and cryptocurrencies have drawn their fair share of media buzz. These technologies have often been touted as the next big thing in secure digital assets, but no one really knew when they would catch on or how exactly they would be used. Sure, a select few entrepreneurs were making money on cryptocurrencies, but very few organizations were really using blockchains in a business setting (except maybe to pay ransomware authors via Bitcoin).
But that's now changing. Increasingly, huge companies like Walmart, IBM, and Alibaba are getting involved in blockchain technology to keep better track of supply chains.
A supply chain primer
Working in IT, you know that even if you bought a laptop from Dell, Lenovo, or HPE, many other companies were involved in making your computer. Components such as the CPU, GPU, memory, screen, trackpad, and many motherboard subcomponents came from different IT vendors. Additionally, many different companies had a hand in writing the software that gets layered on top as well.
The same holds true in other industries as well. Just think how many different farms and suppliers are involved in putting together a fast-food meal. A burrito comprises a tortilla, rice, beans, cheese, vegetables, salsa, sour cream, guacamole, and any one of a wide variety of proteins. And because the same ingredient might be from one farm one week and a different one the next, it can be very difficult to locate the source of an issue like food poisoning.
Blockchain for supply chains
Without a centralized record of when goods in a supply chain changed hands or were processed, it can be hard to track components or ingredients back to the source. For example, when an e. Coli outbreak tainted food in multiple Chipotle restaurants in 2015, even after weeks of investigation, according to the Centers for Disease ControlOpens a new window, "A review of Chipotle's distribution records by state and federal regulatory officials was unable to identify a single food item or ingredient that could explain either outbreak."
In theory, blockchain technology could have helped solve this problem: A blockchain is a public ledger powered by a distributed network of computers that tracks transactions, such as goods moving through a supply chain. According Walmart, since it started using an IBM implementation of blockchain technology, the time it took to track the source of a package fruit went from "days — even weeks" down to seconds.
But how does it all work? According to an April 26 article in ForbesOpens a new window, this is how blockchain can improve food supply chain safety:
Blockchain track-and-trace will help them immediately track affected items to their origins, locating the issue quickly so they can remove the contaminated products from menus, shelves, and supply chains. For example, let’s say dozens of customers fall ill with listeria after eating at a restaurant chain. The restaurant tests the food and discovers raw vegetables are the culprit. Using a blockchain track-and-trace solution, the restaurant will be able to track the serial number associated with the vegetable shipment back to the distributor and then to their original supplier. If they find the vegetables are contaminated, that supplier will immediately be flagged on the blockchain, and anyone who has sourced or bought the vegetables will be made aware of the danger. A solution like this, of course, is contingent upon two things. First, every crate, shipment, or individual package of produce must be uniquely identifiable. The global standards body, GS1, is leading the way in serialization efforts, offering unique codes called GTINs that can be applied to products for these purposes. Second, that participants in the supply chain must transfer the custody of these products every step of the way.
In the food industry, blockchains could also be used to help track the authenticity of food — for example verifying that goods are truly organic and not counterfeit.
Blockchain technology can be used in other industries as well. For example, TrustChain is a technology powered by IBM's implementation of blockchain that's currently being tested in the jewelry business. According to the TrustChain consortium's website:Opens a new window
Blockchain is the enabler for TrustChain™, utilizing IBM’s advanced technology solution, to track and authenticate diamonds, precious metals and jewelry at all stages of the global supply chain, from the mine to retailer. TrustChain™ tracks the jewelry supply chain from the mines of origin of the diamond and precious metals, through to the refining, polishing, jewelry manufacturing and shipping the final product to the retail store. TrustChain™ is extremely secure. It uses a proven technology platform with data verification at each stage in the blockchain.
Finally, shipping giant Maersk recently announced a joint-venture partnership with IBMOpens a new window to create "a shipping information pipeline [that] will provide end-to-end supply chain visibility to enable all actors involved in managing a supply chain to securely and seamlessly exchange information about shipment events in real time." We'd be remiss if we didn't mention that Maersk's computer systems were crippled by the NotPetya ransomware in 2017, so perhaps the distributed nature of blockchain systems (where records are kept in multiple locations by multiple organizations for redundancy) is particularly appealing to the company.
Your thoughts on blockchain in the real world?
What you think about these three examples of how blockchain technology might streamline the tracking of goods as they move through a supply chain? Do you think they are valid use cases? Can you think of other uses for blockchain technology? Join the conversation in the comments!