A blockchain primer
Originally, blockchain technology was designed for digital currencies such as Bitcoin. It wasn’t long before the tech community recognised its potential for other applications, to the point it’s become the backbone of a new type of Internet.
Don and Alex Tapscott, authors of The Blockchain Revolution (2016), neatly encapsulate the technology as follows: “...an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Think of it like this: a spreadsheet that’s been duplicated over and over, across a computer network. That network regularly updates the spreadsheet. The information is basically a shared database, and it’s not stored anywhere specific, so it’s public, verifiable and is very difficult for anyone to corrupt, since there’s no centralised location.
Like the Internet, blockchain tech is inherently robust. By storing blocks of information that are identical across its network, it:
- Can’t be controlled by a single entity
- Doesn’t have a single point of failure
It’s transparent and incorruptible, and assuming the technology behind it continues to be developed, it’s likely to prove as durable as the Internet in years to come.
As everyone in the supply chain industry is aware, managing a chain is complex. It can involve hundreds of stages, many locations, many financial transactions, and potentially thousands of people communicating with each other. There is a real need for more streamlined and efficient processes.
Blockchain is emerging as a potential solution, the new technology makes it easier to track and trace a product, allowing all partners involved to see where it has originated, where it’s been, and where it’s destined to go. This level of transparency makes it harder for counterfeiters to hack into supply chain systems and cause problems.
Given all transactions are recorded on a block, across multiple copies of the ledger, and distributed over many nodes, they are highly transparent.
Traditionally, if business partners were trying to conduct business without mutual trust, the classic way to solve the problem was to employ an intermediary.
Blockchain technology could mean the traditional intermediary solution is no longer required as it establishes trust by:
- Providing a database where all data is distributed to everybody joining.
- Adding some clever cryptography to make it impossible to change or fake data once it has been recorded.
This leads to a database everybody can trust as there is no single party in control. Although it’s a major factor, trust isn’t the only key benefit blockchain can offer to a supply chain. Imagine having the ability to:
- Enable greater efficiency, especially around payments, audits, inventory and assets.
- Visualise the whole journey. You can see where a product came from, where it’s been, and who’s handled it along the way. Again, this increases trust and helps eliminate the bias found in today’s opaque supply chains.
- Increase security. Blockchain provides a higher standard of security, as well as the ability to be customised for more specialised applications.
Businesses can even create private blockchains to keep data internal and share it with only those they give access to.
According to Michael White, the former president of Maersk Line in North America, “One of the advantages of blockchain is the immutable record and trust people can have in it. If anything changes in a document, it’s immediately apparent to all.”
Using blockchain technology applications means a business has the ability to securely and transparently track all types of transactions.
Challenges still to be met
As with all new technologies, blockchain is not without challenges. While most research indicates that it’s a good solution for most supply chains, there are some considerations to take into account, namely:
- The trust issue – for supply chains where trust is a problem, blockchain technology can add trust, transparency, and traceability. However, for supply chains with known and trusted players, a centralised database approach might be sufficient.
- Blockchain experts and blockchain technology companies are not a dime a dozen; they are in fact rare and can be costly. If, as mentioned above, a supply chain doesn’t have any trust issues, the cost needs to be weighed up against the value provided.
- Transaction speed and cost – blockchain transactions aren’t cheap, and the more there are, the slower the transactions become, making them unsuitable for storing rich data such as video and images.
- A limitation of blockchain as a decentralised system is that it lacks scalability. The nature of complex chains that deliver transparency and incorruptibility is that they create numerous links in the chain, increasing the need for additional computing resources and bandwidth. Hence, in a working supply chain context, the role of blockchain is better suited to authenticating transactions, rather than carrying rich cargo data for example.
The missing link
Just as the TCP/IP communication protocol enabled the creation of the Internet, blockchain provides a fundamental building block technology for transforming the global supply chain. Like TCP/IP, it is of little use to anyone without the layers of platforms and applications that can be built on it. This is the promising future that CargoChain faces, establishing the platforms for sharing supply chain information and applying that information to solve real-world business problems.
The CargoChain Platform utilises a revolutionary Information Sharing Protocol, and is underpinned by blockchain technology. This allows the secure sharing of rich supply chain information to all trusted partners, at any time. A cargo-centric approach has been taken to ensure that CargoChain has been created from the most fundamental building block of the supply chain, the cargo itself.
Why is this important? It means that anyone in the supply chain can use the CargoChain Platform, with no barriers, to build applications that solve real-world supply chain problems.
Why building apps for the supply chain is an exciting new area
Supply chain management is big business. The evolution of blockchain technology – which allows greater transparency, security and trust in supply chain operations – means that specialists and app developers are poised to profit greatly from the emerging demand for smarter supply chain management.
Disrupting the model
The global logistics industry has for some time faced a strong need to securely share information. This kind of innovation has to come from an independent network that exists only to help supply chain participants share cargo information seamlessly in the cloud. No enforced business processes, no set standards, just the ability to share information about the core transaction – the cargo to be moved.
Major opportunities for the logistics industry
There can be little doubt, we are on the verge of a new era for global logistics and supply chain management. This provides huge scope for developers to not only make a name for themselves with the rise of blockchain technology, but also to be at the forefront of emerging supply chain technologies such as warehouse robotics, IoT and the rise of virtual logistics teams, meaning businesses can have people working remotely worldwide.
Why businesses want to outsource development
When it comes to supply chain management, there are two key questions business owners and their executives should be asking:
- Can we manage our supply chain operations more efficiently?
- Is there technology we can harness to help us do that?
What they're looking for is a platform that allows the rapid and cost-effective development of applications that solve real-world supply chain problems.
The goal is to improve the overall efficiency of how they manage their supply chain operations. In other words, they want to be smarter about it, and have recognised that the first key step is to harness technology. By now they’ve heard about the benefits of blockchain and how it’s set to disrupt global supply chain management, and they’re looking for technology partners who can tap into that technology and make it work for them.
Outsourcing this kind of development means companies gain access to smarter ways of managing supply chain operations, as well as reaping the benefits of the developers’ technological resources and expertise.
Where CargoChain fits
At CargoChain, we believe that the distribution of rich cargo information in a secure manner will speed up supply chains globally. Our aim is to deliver a blockchain platform for application developers to build supply chain solutions that securely distribute previously unavailable cargo information among trusted partners in the supply chain.
You might understand the technology, but what impact is blockchain actually having on global supply chains?
To find out why blockchain is poised to disrupt supply chain management in 2019 and beyond download our insights paper New kid on the block.