Supply Chain Management with Blockchain

. 3 min read

Blockchain has a path to disruption of virtually every aspect of the business and financial worlds, but there are a few applications that have always gotten more coverage than others. Supply chain management is one such application, and while it might sound a bit boring compared to blockchain voting or similarly controversial ideas, unlike such moonshot projects, it’s already having a huge impact on our everyday lives.

Cryptocurrencies are blockchain’s most famous application, but most people don’t fully appreciate how simple they really are. In principle, the crux of what gives a cryptocurrency value is the same thing that gives a regular banknote value: a serial number, tracked and verified over time by a reliable authority to ensure that it remains unique. In other words, a cryptocurrency is little more than a secured, tokenized serial number.

Supply chain management via blockchain happens according to much the same system, except in this context the tokenized number is in reference to an actual quantity of material. With cryptocurrencies, the serial number is the point of the exercise, in and of itself; on the other hand, if we tokenize the IDs on trucks in a network of warehouses, the numbers are only useful in that they can then stand in for the physical truck in vehicle tracking, scheduling, and maintenance routines.

Blockchain for Supply Chain in Action

The big advantage of this is that once information is logged in the blockchain, it can then be logged in the ledger, making it both immutable and visible to anyone in the supply chain. This means that it is possible to check the exact path that any particular tracked item has taken (be that item a truck, a bin, or an individual unit of product), making it far easier to optimize those pathways over time. And since the ledger can be visible to anyone with permissions, the overall supply chain can be much more agile in how it reacts to unforeseen events; if one warehouse ends up with a shipping shortfall, a smart contract may very well be empowered to notice an idle truck nearby and automatically assign it to move in to take over.

All this means that companies can do more, more quickly, while expending fewer resources. That means either greater profits for shareholders, or lowered prices for customers, or both.

And with more agile supply chain tracking for perishables like fruits and veggies, it’s possible to move shipments around quickly enough to beat their expiration dates, helping to deal with issues like food waste. Blockchain-based supply chain systems can present certain pieces of information to the public via outward-facing databases, putting up-to-the-minute intel at their fingertips for things like stock checks.

The supply chain tracking paradigm can be applied in a wide variety of contexts -- for instance, in the mining of resources in historically unstable regions. Intel recently completed a total rare earth elements supply chain review, taking enormous steps to ensure that it was not accidentally buying conflict metals from murderous warlords; had Intel attempted the same feat just a few years later, it would have almost certainly used the blockchain to do so with far less bother.

Because they handle proprietary information, supply chain management solutions are generally private blockchain applications. Some of the biggest right now come from the giants of the information technology business, including IBM and Oracle, but there are also some new entrants like VeChain and WaltonChain that have also done extremely well for themselves.

Supply chain management is like a lot of blockchain applications, in that its greatest impact on people happens via trickle-down; first the blockchain streamlines processes for business, then business streamlines processes for their customers, both in terms of time and pricing. In the long run, this makes it easier and cheaper for new companies to start successful businesses that can compete with any established player. So, in the long run, blockchain supply chain management allows for greater competition and, through that, a wider array of new services and products.