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What if you could transfer funds to your business partner in another country in real time, without having to worry about fraud or settlement delays? What if you could track a mango back to the grower in a couple of seconds, as well as see every stop it’s made on the supply chain between the farm and the grocery store? If you think this is wishful thinking, you’d be wrong. Companies around the world are making such activities possible using blockchain, a transformative technology based around shared, distributed ledgers that enable untrusted parties to transact and exchange value with certainty.
Going into Distributed: Trade 2017, I wrote a blog post about my expertise with blockchain for cross-border payments and blockchain in the insurance industry. However, one of the great things about the conference was the fact that it had two educational tracks — Supply Chain and Financial Services — showing that companies from multiple industries and of all sizes are looking at ways to gain efficiencies with blockchain (and sometimes together on the same blockchain). It also gave me a chance to explore blockchain for supply chain in more depth. These are my top takeaways.
Blockchain for supply chain: Data visibility
Blockchain helps solve the social problem of whether people are willing to share information. It does this by increasing end-to-end visibility for all participants in a supply chain. With a shared, distributed ledger, everyone has access to the same, up-to-date information. New records can only be added when known participants have consensus on the validity of a transaction. Once added, those records are immutable, so nobody has to worry about unauthorized changes being made. These characteristics of blockchain help to increase trust.
With increased data visibility, you also get trackability, traceability and transparency. This is especially beneficial in the realm of food safety. With trackability, the source of compromised food can be pinpointed, reducing illness and cost. Better product accuracy through traceability can reduce mistakes and food fraud. And through transparency, companies can improve flow and shelf life while reducing waste.
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Blockchain for supply chain: Process optimization
Through blockchain, companies can optimize their administrative and business processes. Major sources of inefficiency in the supply chain are manual, paper-based processes that waste time, cause errors, increase fraud risks and make inventory management difficult. Digitizing products on blockchain can reduce the amount of paperwork in a supply chain and increase the accuracy of records, cutting the number of invoice disputes and lowering the total cost of procurement.
Traditionally, participants in a supply chain contact only the people they deal with directly. The person at the start probably won’t know what’s going on at the end. However, if everyone has access to the same information, there will be increased visibility of order status, leading to more proactive management of inventory allocation.
Blockchain for supply chain: Technical considerations
The underlying technology of blockchain for supply chain must meet the scalability, security, identity and reliability needs of participants in an enterprise ecosystem. A blockchain for business is designed to favor identity over anonymity because businesses should know who they’re working with.
The right infrastructure is a very important component. Blockchain implementations require the highest level of protection against tampering and misuse of data as well as the ability to process high volumes of data quickly at scale. They also require round-the-clock availability since all peers participate in the network to provide consensus for ledger replication. Check out IBM Z to learn about a platform that was designed to meet these types of requirements.
Final thoughts on Distributed: Trade
Overall, the conference was a great opportunity to both share and extend my knowledge of blockchain, and to engage with many blockchain enthusiasts. The content of the panels I attended was very relevant, ranging from initial coin offerings (ICOs) to technical considerations for getting started developing a solution or joining an ecosystem. There was also a good mix of industry focuses for food, manufacturing, pharmaceuticals, insurance, trade and finance. It was inspiring to listen to everyone’s visions for the future of trade and to see the kind of progress so many have already made using blockchain technology.
If you’re interested in building a blockchain solution for financial services or supply chain, consider doing a two-day design thinking workshop through IBM Bluemix Garage for blockchain. And don’t forget to join the IBM Blockchain community for news:
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