The Global Supply Chain is Broken. Can Blockchain Help?
"We project that by 2023, 35% of enterprise blockchain applications will integrate with decentralized applications and services. The rewards are simply too high to ignore, and are far greater than the costs.", Avivah Litan, Gartner, response to Hype Cycle for Blockchain, 2021.
Blockchain is not a process improvement technology - at its fullest deployment potential, it is a disruptive technology. The more fundamental a technology, the more impact it can have. Thus blockchain adoption will challenge centralized applications and force teams to go back on the drawing board.
About 90% of U.S. and European banks had started exploring blockchain’s potential by 2018, Fortunly.
In a survey conducted by Deloitte, 86% of tech-savvy executive teams said they believe there’s huge business potential in blockchain technology.
There are numerous supply chain and authenticated provence use cases that benefit from the blockchain.
Let’s look at just global shipping. An estimated 90% of goods are shipped by sea by roughly 60,000 cargo vessels. Each cargo vessel carries 24,000 containers. At that magnitude, it is not hard to understand why thousands of containers get lost at sea every year. What gets lost? Everything from the banana and coffee you had for breakfast to the microchip in the device you are reading this on. You can use blockchain to track your cargo like you track your Amazon order.
You can do more with the blockchain. Think of the coffee retailer, they would like to know the basics like, "when will the goods arrive?" and the details "what temperature was the coffee stored at?" to "was it ethically sourced?" Such questions are nearly impossible for the small retailer to answer given the complexity of multiple organizations and sovereign boundaries traversed in the supply chain. Large retailers, such as Walmart, have deployed blockchain-based supply chain solutions and reduced the time to answer such questions from a week to seconds. Today, Walmart can track the origin of a specific mango sold in its store in 2.2 seconds.
Remember when the Ever Given, a container ship, was stuck for almost a week in the Suez Canal? You probably felt the impact of it. Personally, my IKEA closet project is incomplete because 50% of the SKUs needed are still not available.
Every business wants to understand their exposure to such incidents. With the increased complexity of the global supply chain and deep dependency among suppliers and manufacturers, it is hard to estimate the impact of such events. The probability of such an event is going up, not down.
For example, let’s say you indirectly relied on a small factory in Yuzhou City, China. What do you do if the entire city is shut down due to COVID-19 protocols? How quickly would you know the impact on your business? Would there be enough time to go to another supplier?
I also like the 'no-so-modest' idea proposed by Lynn Torrel, chief procurement and supply chain officer of the manufacturing company Flex, to fix a broken supply chain. She makes a good point and calls out the importance of sharing data with a neutral third party or a government body to forecast actual demand and feed it back into the system. This way, every party involved in the specific good's production and demand fulfillment becomes aware of the actual demand.
I know it is hard to bring multiple competing parties to the table. If trust is the issue, then blockchain is a potential solution. If the speed and the cost of blockchain implementation are an issue then keep reading - we at Vendia have an answer. Vendia Share is a serverless enterprise blockchain platform that you can use to implement a supply chain solution in a few months without hiring additional back-end developers. Since it is serverless, it is cost-efficient and operationally lean.
If your business is feeling the pain of the global supply chain crisis then it time to act. I am sure there are use cases for which you don't have to wait for the blockchain accounting standards and global regulations. Use your intuition to see whether blockchain will solve your business problems, and do a quick proof of value project.
If you are having a hard time aligning business use cases to the blockchain or think blockchain is challenging and complex, we at Vendia have a solution for both problems. We can work with you to identify use cases and demonstrate business value in weeks and time to market in a few months.
Drop us a note at contact Vendia.