Using blockchain technology to build supply chain resilience
July 2021: Globalisation has intensified, expanded and complexified the supply chains we all rely on, writes Charles Masser. This complexity, and efficiency driven cost-saving practices, have rendered supply chains vulnerable.
With the increasing threat of pandemics, trade wars, skills shortages and cyber-risk, it has been repeatedly highlighted how exposed and interconnected supply chains are, as most recently demonstrated by the Covid-19 pandemic.
According to the Business Continuity Institute, in 2020 almost seven times as many organisations experienced ten or more disruptions compared with 2019.
We must rethink how we can bring supply chain management into the 21st Century, making use of innovative tools, that can fundamentally change how supply chains can be made more resilient.
An emerging technology touted for improving supply chain management is that of blockchain. This is the foundational technology behind cryptocurrencies, such as Bitcoin. Cryptocurrencies are often met with criticism or overt hype; however, they should be treated separately from their base technology, which has far more potential applications.
Blockchain is essentially a database. A database that is distributed among a network of actors. All in the network are owners of the database, meaning there is no central server storing data. Data is stored in blocks; each block has an ID, a timestamp, and all are cryptographically linked through hashes.
Data, in this sense, could be a transaction, a document, a statement, virtually anything that can be represented digitally. For a block to be added to the chain, consensus must be reached within the network. The level of consensus required is dependent on the needs of the supply chain network. Consequently, what this does is provide only one version of the database of which everyone in the network has the same copy. Once a block is added to the chain it cannot be removed. Therefore, blockchain provides a tamper-proof transaction ledger that is chronological, immutable and more secure than a single central server. Another important attribute is the smart contract. These are contracts in the form of code stored on the chain, which automatically execute when certain conditions are met.
Blockchain has the potential to increase the traceability, visibility and flexibility of our supply chain networks, through increased collaboration and integration of organisations. The process of sharing information and data, of which is higher quality than currently achieved, will allow for better informed supply chain management decisions.
IBM and Walmart recently partnered for a blockchain pilot. They were able to trace mangoes in North America back to their source in South America within 2.2 seconds – a process that would normally take seven days. This end-to-end documentation the technology can provide can be used to verify sustainability practices, increase food and pharmaceutical safety, identify counterfeit goods and much more.
Blockchain is a part of the wider Industry 4.0 technologies that are disrupting how resilience is cultivated within organisations and society. The pandemic has provided the perfect opportunity to reflect and reimagine how resilience can be achieved in businesses and their supply chains. If barriers to the implementation of new technologies are to be identified, they must be examined through the lens of the workplace professional. That is why my dissertation will investigate the perceptions of supply chain and resilience practitioners towards this emerging technology.
The global supply chain has begun to face monumental challenges such as climate change, pandemics and cyber-threats. Researchers and practitioners must continue to push ourselves to think innovatively, to ensure we are ready for intensifying threats to supply chain resilience.
If you would be interested in completing a short, anonymous questionnaire, please contact me here. And, importantly, no blockchain knowledge is required to take part.