Exploring the Buzz About Blockchain and the Supply Chain - Jan 2018

Supply chain and logistics professionals have long turned to technology such as Transportation Management Systems (TMS) to increase the efficiency and security surrounding shipments, transactions, and relationships. Combined with technology such as GPS and RFID, TMS software can track shipments through nearly every touch point and give shippers piece of mind.

But what if we could do more? What if the supply chain transparency shippers and consumers have come to expect could extend beyond logistics providers to suppliers in every tier? What if we could guarantee that no stakeholder could alter information about products and materials? What if we were 100 percent sure that every item on the invoice originated where the supplier says it did?

Blockchain technology promises security and transparency at this level, according to experts. Financial firms have been experimenting with blockchain solutions for a few years now with marked success, and the technology has now garnered the attention of supply chain professionals. In the logistics technology world, developers have realized that a blockchain transaction does not have to be financial. Instead, it can be a delivery or a check-in, a verification of an industry certification, a source location for materials and supplies.

How Does It Work?

 While blockchain has been a buzzword since the first time Bitcoin made the news, shipping stakeholders not directly involved with technology development may not know exactly what it is or how it works.

 “Blockchain is a technology that can allow authenticated data communication between each player in a supply chain without the intermediation of a trusted central organization,” according to ”Using Blockchain to Drive Supply Chain Innovation,” a new whitepaper from Deloitte.

 For the layman, information – touch points, financial transactions, supplier/shipper data, etc. – gets stored in “blocks,” which make up a digital ledger. The information in these blocks then gets verified by stakeholders or network users, known as “miners.” Each block links to the next, and to the next, creating a chain: thus, blockchain. To alter or change this information in any way involves a nearly insurmountable amount of work from multiple stakeholders at multiple access points, meaning that any one participant cannot alter data after it has been added to a block.

Blockchain in the Supply Chain

 Blockchain technology isn’t widespread enough in the logistics realm yet to support any sort of unified effort for development, so it will likely be several years before any sort of standard is agreed upon for supply chain use. Deloitte lists the following potential benefits blockchain may have for the supply chain: 

  • Increased material traceability
  • Reduced counterfeiting
  • Improved visibility/compliance over vendors
  • Less paperwork/administrative costs

Many pilot programs are already showing promising results. Blockchain technology has been tested to track tuna from ocean to fork, reduce the flow of counterfeit drugs in the pharmaceutical supply chain, and stop the spread of conflict diamonds. Given it’s potential, it’s likely that blockchain will become a staple of logistics technology over the next decade.

That’s not to say that current TMS or other software solution will be replaced or become obsolete. More accurately, the technology we trust today to help manage the supply chain will be augmented with blockchain to become even more secure, more efficient, and more visible. For the time being, just make sure that you use logistics and technology providers who are aware of blockchain technology and its disruptive potential.

 “In the news blockchain is just Bitcoin,” says Joe La Chapell, manager of information technology for WSI. “But the underlying technology is really exciting. I think it’s going to add a lot of value to existing supply chain technologies and to the customers that use it. For those that are interested in authentication, chemicals, drugs, the gray market – anything that can be interceded or manipulated from a supply chain standpoint – it’ll add value.”

Disruptive technologies come and go, but in the case of blockchain, we’re confident it’s here to stay. WSI works every day to prepare for the changes blockchain will bring to supply chain management. When the future arrives, we’ll be ready. Will you?