Where is Blockchain Technology Right Now in Q2 2019?
Advanced technologies like Blockchain and the Internet of Things (IoT) are making inroads in many industries, including food and beverage. Numerous supply chain industry analysts and thought leaders think these technologies will become commonplace within supply chains over the next five years. With blockchain, however, there needs to be a legal framework created for developers; this will probably come about in the next year or two.
Blockchain works well in industries that are highly regulated like chemicals, pharmaceuticals, food, and beverage, etc. Why? Because these industries require bringing transparency to activities like tracking food products from farm to table. Many people focused on healthy living and sustainability want to know more about the products that they buy, sell, use, and how they are disposed of. They want to know where products are sourced and whether these products are sourced and supposed for possible re-use ethically.
Blockchain provides traceability in product lifecycles by relating data, propagating it and sending it through an organization. In many manufacturing processes, there are steps in the sourcing and production process where documentation is created and accompanies the products as they travel from raw material through stages until finished goods and delivery. This documentation can be regulatory requirements or contractual information. Blockchain helps to correlate and audit the information, such as nutrition and packaging certifications that are created through collaboration with other parties.
Companies are beginning to pilot blockchain to: overcome a particular issue they are having; at the request of a customer; or to gain a competitive edge. Pharmaceuticals are using blockchain to deter the growth of counterfeit drugs. Healthcare is using blockchain to uncover fraud while the insurance and real estate businesses are using blockchain for policies and property transactions. Since the blockchain is based on a trustless system, the traditional paperwork requiring signatures and approvals that are used to validate an event can be eliminated through the usage of the smart contract.
When starting a blockchain project, businesses need first to discern what they are trying to achieve with the blockchain and what are the goals of the project. Do the participants want to improve traceability, prove compliance regulations have been met, get closer to customers? Digital finance is leading in the blockchain marketplace with the most adoptions of the technology. However, experts believe that supply chain applications will overtake the digital finance space in the next 4-5 years.
Experts agree that it requires vision and willing partners to participate in a blockchain trial. Companies can start with a small pilot to prove their value to the participants. Elemica participated in a small pilot to determine if EDI and XML could transact on the blockchain. They created fingerprints of transactions and published them in a permission, private blockchain. A carrier was brought into the mix to try to prove that when goods were delivered whether it could trigger a payment to the carrier through the blockchain. The pilot was successful, and the group continues to test other various scenarios of the supply chain such as material validation and sustainability.
Blockchain Maturity Cycle
Consortiums are forming across various verticals to undertake blockchain projects. The technology is improving with increased rates of transactions/second. As technology improves and a legal framework is standardized, more companies will undergo blockchain projects.
Many adjacent tech trends complement blockchain, and as a result of their success, more technologies will be used with blockchain projects. For example, IoT devices are being used with blockchain. Smart pallets carrying chemicals use tag sensors to measure decibels, temperature, heat, etc. The data is streamed into the Elemica Digital Supply Network platform where it is rationalized and related to a shipment. If there is a deviation in the information, such as a rise in temperature, the customer is alerted to solve the problem.
The future of blockchain within the supply chain is that more and more companies will adopt the technology. It will be used by the food supply chain for tracking the food from the farmer to the consumer forward and backward. The circular economy and the reduction of waste will use blockchain for sustainability and compliance. It will be used to uncover fraudulent activities, such as another type of oil being sold as olive oil. It can uncover whether hazelnuts have been mixed with peanuts, saving the lives of those who are allergic to peanuts. The success of blockchain will continue to grow as it is used to solve more and more problems in global supply chains. Hang in there – the technology has only just begun to bring value to the enterprise.
To learn more, visit here to listen to a recent Elemica webinar on blockchain.