Although Bitcoin initially fueled blockchain awareness, many still aren’t sure exactly what blockchain is, how it works, or the manner in which it can be applied to various industries. While some experts view blockchain as the next frontier of business, and early adopters are touting its benefits—others are still trying to wrap their minds around the concept and whether it’s a fit for their organizational needs.
Here, we dig into some blockchain basics, as well as a few examples of how blockchain leaders are applying this digital dynamo to make a difference in the supply chain.
What is blockchain?
IBM defines blockchain as “a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.” The firm notes that assets can be tangible or intangible and that “virtually anything” can be tracked on a blockchain network, which helps to reduce both risks and costs for those involved.
According to IBM, blockchain is important to business because it “provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members.” This shared, “single view of the truth” provides end-to-end visibility of each transaction, which enables a variety of benefits—such as increased trust, more efficiencies, and the potential for new opportunities.
IBM describes the key elements of a blockchain as:
Distributed ledger technology—which gives all participants access to a shared ledger in which transactions are only recorded once.
Immutable records—meaning that transactions cannot be changed once they’ve been recorded in the shared ledger. If an error needs corrected, an additional transaction must be added to reverse the error.
Smart contracts—which are a set of rules stored on the blockchain that are automatically executed to help speed transactions.
Describing how blockchain works, IBM says individual transactions are recorded as a “block” of data that contains any type of information needed. Each block is then connected to the blocks before and after it, which creates a chain of data that provides visibility into each transaction so network members can view the exact time and sequence of transactions.
Since the blocks are linked securely to one another, there’s no ability to alter the sequence of the existing blocks. Additionally, “each additional block strengthens the verification of the previous block and hence the entire blockchain. This renders the blockchain tamper-evident, delivering the key strength of immutability.”
This lightboard video from IBM Technology provides an explanation of blockchain technology and covers a variety of topics—including the difference between the permissionless blockchains often used in cryptocurrency compared to the permissioned blockchains typically used for business.
Blockchain for the Supply Chain
Many supply chain stakeholders are already benefiting from the blockchain solutions offered by various organizations—including two of the global leaders in the space, IBM and EY.
IBM offers blockchain solutions for supply-chain-intensive industries such as shipping, food supply, retail, and manufacturing.
For instance, in shipping and container logistics, IBM says its TradeLens platform “offers a consistent and holistic view of reliable shipment event data and corresponding documents—all delivered directly from participating sources. It’s a single source of truth shared by—and with—permissioned supply chain partners for collective success.”
Initially launched in 2018 with A.P. Moller-Maersk, the TradeLens ecosystem has continued to expand. According to a June 24, 2021 press release announcing the addition of Hapag-Lloyd and Ocean Network Express (ONE) Pte. Ltd., “The TradeLens ecosystem now includes more than 300 organizations – encompassing ten ocean carriers and data from more than 600 ports and terminals. TradeLens has already processed 42 million container shipments, nearly 2.2 billion events and some 20 million documents. In total, five of the top six global shipping carriers are now integrated onto the platform contributing to the digitization of documentation and automated workflows.”
In this video from TradeLens, leaders from Maersk, MSC and CMA-CGM discuss how the platform is “transforming global trade.”
Another global leader in applying blockchain to the supply chain is EY, which announced in May of 2021 that it was increasing its investment in the blockchain market by another US $100 million to keep up with demand.
Quoted in the announcement, Carmine Di Sibio, EY Global Chairman and CEO said, “Over the past five years, we have been investing in blockchain and have developed innovative solutions, establishing EY as a leader in this emerging industry. As blockchain adoption continues to grow and we see more demand from EY clients, we are excited about further EY investment to respond to their challenges and needs.”
On the same day, EY announced that Birra Peroni, the Italian beer company that’s part of Asahi Group, was “the first industrial organization to use EY OpsChain Traceability to notarize information and tokenize goods leveraging non-fungible tokens (NFTs) on the Ethereum public blockchain. Birra Peroni is using EY OpsChain Traceability, an EY blockchain as-a-service offering on blockchain.ey.com to mint unique non-fungible tokens (NFTs) for each new batch of beer, enabling greater visibility and efficiency across its supply chain.”
According to the release, “EY OpsChain Traceability includes the ability to develop complex multi-stop supply chains, direct enterprise resource planning (ERP) integration through application programming interfaces and the ability to invite and collaborate with business partners. This solution addresses business expectations that are increasingly focused on operational efficiencies and transparency, accelerated by the COVID-19 pandemic.”
Quoted in the release, Paul Brody, EY Global Blockchain Leader, said, “With EY OpsChain Traceability, we make it easy for enterprises to set up their operations and make the entire Ethereum blockchain an extension of their ERP environment. EY teams are committed not just to enabling business processes on the Ethereum blockchain, but to making the inputs and outputs properly tokenized and transactable. We envision a future where everything from inventory to purchase orders to invoices can be tokenized and integrated into a decentralized finance and business operations ecosystem.”
In the following video from SupplyChainBrain, Brody describes the progress being made using blockchain technology for supply chain management, as well as what else is needed for it to reach its full potential.
In addition to the blockchain leaders mentioned here, another resource that can help supply chain stakeholders explore the potential of blockchain is the Blockchain in Transport Alliance (BiTA).
According to the website, BiTA was founded in August of 2017 and “has quickly grown into the largest commercial blockchain alliance in the world, with nearly 500 members in over 25 countries that collectively generate over $1 trillion in revenue annually.”
BiTA describes itself as a “member-driven” organization with members who primarily work in the freight, transportation, logistics, and related industries.
Additionally, “Alliance members share a common mission of driving the adoption of emerging technology forward. We accomplish this by developing industry standards; educating members and others on blockchain applications/solutions and distributed ledger technology (DLT); and encouraging the use and adoption of new solutions. Thousands of companies have applied for membership.”