Blockchain is an emerging technology for authenticated data communication between different parties in a supply chain, without the intervention of a trusted central agency. Most importantly, by validating and adding data in real time, blockchain can increase transparency throughout a supply chain Tweet This!.
Blockchain is, according to Bank of England, “a technology that allows people who don’t know each other to trust a shared record of events.”
A blockchain consists of a “chain” of information-storing “blocks,” with each block containing information such as transactions made, amounts, and parties involved. It is a technology that promotes data integrity, transparency, and a “trustless trust,” since participants don’t have to know or trust one another.
As blockchain attracts publicity, both large corporations and startups are inventing new uses of the technology. Provenance, a supply chain transparency startup, just completed a six-month pilot for tracking responsible sourcing of tuna in Indonesia through blockchain.
Benefits of using blockchain technology
Greater transparency, as well as reduced cost and risk across the supply chain are among the benefits of using blockchain, along with more accurate end-to-end tracking. As more and more consumers mention product traceability and transparency as a critical factor influencing their purchasing decisions, these advantages become increasingly important. In addition, companies can spend less time validating data and spend more time delivering goods and services, improving quality.
Increased traceability of material across a supply chain can, also, help build a reputation as a leader in responsible manufacturing and avoid public relations disasters stemming from, for example, unapproved subcontracting.
More specifically, the primary and secondary possible benefits of using blockchain, include:
- Primary possible benefits:
- Increase traceability of material supply chain
- Reduce losses from counterfeit/gray market trading
- Improve visibility and compliance over outsourced contract manufacturing
- Decrease paperwork and administrative costs
- Secondary possible benefits:
- Strengthen company reputation by providing transparency of product materials
- Increase credibility and public trust of data shared
- Minimise possible public relations risk from supply chain malpractice
- Engage and collaborate with stakeholders
Important quotes regarding blockchain
“Blockchains are at the heart of the fourth industrial revolution.”
Klaus Schwab, founder and executive chairman, World Economic Forum
“The blockchain is to trust as the Internet is to information. Like the original Internet, blockchain has the potential to transform everything.”
Joichi Ito, Director, MIT Media Lab
“If you work in business or government, you need to understand the blockchain revolution.”
Erik Brynjolfsson, Professor at MIT
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This article is based on published information by Deloitte. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the publication’s meaning. If you would like to quote these written sources from the original please revert to the following links:
“Blockchain Revolution: How the technology behind bitcoin is changing money, business and the world” Don Tapscott & Alex Tapscott