Blockchain can repair our broken global supply chain

If you’ve been shopping recently and found an empty shelf where your favorite cereal or ice cream is usually stocked, you know that the global supply chain is facing some serious problems right now.

The global supply chain has always been a delicate and complex system, which has only been further complicated recently by an ongoing global pandemic and war. An estimated 90 percent of the world’s goods are sent by sea via approximately 60,000 cargo ships. The largest cargo ships carry 24,000 containers. At that scale, it’s not hard to see why everything from the coffee you drank this morning to the microchip in the device you’re reading this on could be lost or delayed.

There have been problems with supply chains long before the COVID-19 pandemic. Over the past few decades, companies have invested in information technology that helped improve the flow of goods around the world. IT investments in ERP systems, EDI exchanges and standards such as ISO 9001 helped make global supply chains more efficient. But as today’s shopper can attest, there is more work to be done.

Supply chain adaptability, agility

Today, up to 80% of critical business data lives outside the company’s four walls. Suppliers, manufacturing sites, distributors, wholesalers – there are too many parties trying to coordinate their transactions using disparate systems that don’t communicate well with each other. This situation creates a number of problems, because each of these businesses requires critical, accurate and timely data about the goods they trade, as well as information about any events that could have serious implications for their supply chains, customers and individual brands. reputation. With the increased complexity of the global supply chain and deep dependencies among suppliers and manufacturers, companies are experiencing new backlogs and information breaches on a regular basis, with empty store shelves and lower profits among the inevitable results.

Modern IT solutions in the supply chain must already support sustainability and visibility. But the growing problems of multi-level suppliers and the need for improved information flow in the global economy have placed a new and urgent emphasis on supplier customization and supply chain agility in general, especially as multi-level supply chains with worldwide reach are increasingly becoming the norm for businesses. Today’s multi-level supply chains require technology solutions that give all parties improved visibility into where, when and how goods flow, and how the end-to-end mechanics of the supply chain fit together. Without this visibility, companies will not be able to understand actual and potential disruptions as well as opportunities to prevent or mitigate disruptions.

Next generation blockchains

Next-generation blockchains that combine blockchain and cloud technologies are a solution that can help solve supply chain coordination problems. Companies can use blockchain technology to track cargo, in the same way that orders and shipments are tracked by the end customers of a retailer like Amazon. Blockchain’s value lies in the ability it gives parties to share data quickly and securely in a way that is also decentralized.

Consider a gourmet chocolate retailer who needs to know important details about their product, such as when new stock arrives, whether it was exposed to above-melting temperatures during transport, and whether the cocoa beans were ethically sourced and sustainably farmed. Only by gathering various data from many different parties – cocoa bean farmers, product transporters and warehouses, manufacturing, logistics and retailers – can this end-to-end view of a chocolate bar be established and maintained over time.

Other benefits

Other features of next-generation blockchains that benefit supply chain tracking include:

Being SaaS-based, they easily connect the entire ecosystem

Next-generation blockchains are often delivered in a software-as-a-service (SaaS) form, eliminating the need to manually deploy, secure, maintain and pay for infrastructure scaled to peak capacity as a prerequisite. By its very nature, SaaS connects all parties in a value chain to ensure 100% authenticity and provenance and to ensure that everyone in the ecosystem has the same trusted and complete view, from raw material to finished product delivery.

They are focused on privacy, security and compliance

Next-generation blockchains and distributed ledgers offer turnkey solutions for data protection, making it easy for data producers to decide who can see or update their data using simple permission mechanisms. With so many parties involved, and so much supply chain data being produced and consumed in real time, it is critical that companies have the ability to not only share their data, but also enforce (and audit) who has access to their mission. critical business data. When competition or antitrust rules apply, these issues become even more pressing.

They are energy-conscious and cost-effective

Next-generation blockchains are energy- and cost-aware, avoiding the ecological impact of proof-of-work systems and taking advantage of multi-tenant cloud architectures, and are able to pass these cost benefits (and carbon footprint) on to users.

Must face challenges

Meeting the challenges of supply chain tracking is essential for companies to not only have real-time data around the location, status and quality of goods flowing through these chains, but also to better understand a specific good’s production and demand fulfillment. When companies have this level of detail, in real time, they not only have the critical information needed to run their business smoothly, they can also offer better services and experiences to their customers.

Tim Wagner is CEO and co-founder of Vendia.