The efficiency of a supply chain can drive business success. In a new study conducted by Insolar, blockchain technology could save businesses in Western Europe $450 billion in logistics related costs. The study says that blockchain technology can reduce supply chain-related costs for businesses between 0.4% and 0.8%. The study also says that the technology that will be used to build out the blockchain supply chain will pay for itself.
What is Blockchain?
Blockchain is a process were journal entries are entered for every transaction. The entries cannot be altered and need to be verified. Blockchain is the software method that provides the platform for bitcoin trading.
Issues with Current Supply Chain Processes
The study of blockchain technology in Europe also focuses on the current technology that is in place. It says that the current mechanism such as enterprise resource planning and traditional databases do not address contemporary supply chain issues. There reasoning is that approximately 80% of enterprise data is prone to reduced integrity. The current process fails to provide a sharing mechanism which is the key for counterparties that do not trust one another. Additionally, the data is not consistently current and leads to a lack of trust according to the study.
Blockchain Technology Makes it Easier for Recalls
Blockchain technology is becoming more widespread across supply chains. Walmart, one of the largest retailers in the world says that distributed ledger technologies like blockchain make it easier for the firm to recall problematic food items. The study also pointed out that consulting firms are now recommending blockchain technology for supply based platforms. They point to Big Four audit firm KPMG who launched a blockchain-based platform in Australia, China and Japan.
Food Giants and Countries are Eye Blockchain Technology
Reports show that retail giant Carrefour and Swiss food and drink conglomerate Nestle joined IBM’s Food Trust platform to track the supply chain of milk-based formula. In August the Indian state of Maharashtra, which is where most of the Agriculture in Indian is grown, has prepared regulatory processes to test blockchain in various applications including supply chains of agricultural products.
Food and agricultural products lend themselves to the blockchain methodology as you can see the entire supply chain and where the food or initially came from. This is very important with certain types of agriculture specifically in the United States and Europe.
For example, organic grains that are used for human consumption or even feed, have experience fraudulent through the supply chain. There are well documented stories through the Washington Post that show that the supply chain is ripe for fraud and a blockchain supply chain could help mitigate some of these problems. The Washington Post reported that overseas shipments involving millions of pounds of corn and soybeans were sold as organic but appeared to come from conventional farms and handlers. This type of process needs to be address and can be through a blockchain supply chain process.