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Blockchain: The Backbone Of Digital Supply Chains

Supply chains today are inherently complex, encompassing many players from around the world.


As supply chains impacted by the Coronavirus disease (COVID-19) prepare to recover, there is still a great deal of unknowns and future uncertainty. The pandemic has induced simultaneous and sudden drops in both supply and demand, resulting in deflation and creating a negative spiral, presenting new challenges for supply chain leaders. The pandemic reveals weaknesses in the supply chain To illustrate the current situation, think of your business as a river in which rocks are hidden under the water. The river flows over the rocks, and at times, those rocks shift. They can block water from moving or change the flow of the water completely. In this analogy, the pandemic has lowered the water level and exposed rocks you couldn’t see before because they were hiding under the surface, causing unexpected shifts and problems. With those rocks exposed, you are able to take a closer look at the issues behind the most important aspects of the supply chain. Many supply chains face challenges that have significant implications in terms of cost, speed, and (product) quality. In our experience, the most critical supply chain challenges—despite years of efforts and often significant investments—are lack of transparency due to inconsistent or even unavailable data, high proportion of manual (paper) work, lack of interoperability, and limited information on the product’s lifecycle or transport history. In many cases, blockchain applications can counter these inefficiencies and add new value. Blockchain was first deployed commercially about four years ago in the financial-services industry to make trade/claims settlements and international payments more secure and efficient. More recently, other industries, including retail and consumer goods, are piloting blockchain applications. By leveraging the technology’s decentralized cloud database, which records data in non-changeable blocks that can be shared with any number of players, global players like Walmart or Carrefour intend to increase transparency and drive value at every step of the supply chain. End-to-End Data Transparency End-To-End Blockchain-Enabled Supply Chain Example Of Dry Aged Beef

Taking the supply chain of dry aged beef as an example, the significant potential of blockchain along the whole supply chain quickly becomes apparent (see “End-to-End Blockchain-Enabled Supply Chain”). In response to customers’ increasing demand for local and organic products with clear origin, for example, retailers could provide selected product-related data through an app. With a simple QR-code scan on their smartphone, customers could validate every step the beef has taken through the supply chain, and match that journey against their expectations. Any kind of historical as well as real-time data on the beef product, be it related to the origin (such as feed or breeding), timing (such as aging duration, time in transport, best before date), location (of the farm and of the beef throughout the supply chain) or additional information (such as recipes and wine suggestions) is continuously available from the blockchain database in a single, consistent version (“one source of truth”). Through further value-added services like specific recipes and wine suggestions, retailers can drive sales of other products. Of course, blockchain can be used in supply chains of industries beyond retail. In the spare-parts industry, for example, blockchain could capture and record spare-pa