Emerging blockchain technology enables members of a consortium to share data in a secure and trusted environment. Many of today’s block-chain programs involve an industry’s unique supply chain. Trading partners and competitors build an application on blockchain, and in many cases provide a level of coopetition. Using blockchain, members obtain improvements in operational performance. ARC has examined 20 pilot programs in the aerospace, automotive, chemical, food & beverage, logistics, mining, oil & gas, pharmaceutical and power industries. Common attributes include:
- Independent entities with common interests and shared pain points
- Sharing immutable data to improve operational performance
- Each POC typically has a leader that initiates the consortium and starts the network effect, but all invest and all benefit
To achieve operational improvements, consortiums are implementing blockchain in industry and supply chain applications to create trusted peer-to-peer networks. Blockchain is often used in supply chains to support track and trace efforts in Industry. Please visit market analysis page for recent ARC research related to Blockchain in Industry.
Supply Chain Track and Trace Includes Processing
The key benefits of many current pilot programs involve limiting the cost of a recall or identifying counterfeit products. For this to be effective, a blockchain-enabled track-and-trace solution must include the processing nodes of the supply chain. This requires data from the manufacturing execution system (MES) as well as the warehouse management system (WMS), transportation management system (TMS), and associated cold chain applications. To provide effective visibility, track and trace must go beyond just transportation and include the activities in the processing steps.
Growing Occurrence of Recalls
Access to data and analytics have empowered governments and non-governmental organizations alike to identify issues in the supply chain. For example, the US Centers for Disease Control and Prevention (CDC) has vastly improved its ability to use technology to identify foodborne illnesses. This enables greater regulatory oversight and stronger enforcement. In just one recent example, with electronic access to health data and improved analytics, the CDC found just 100 illnesses among over 100 million people – that is one in a million. Those 100 people were spread across 33 states with 30 people hospitalized and (luckily) no reported deaths. This triggered a recall in 2018.
Blockchain Key Strengths
Blockchain software encompasses three major components:
- Multiple layers of cryptography that prevent altering and enables trust
- Distributed ledger with multiple copies to identify any alteration
- Logic for decentralized governance with no central authority or broker
To improve transaction speed and lower overhead costs, other versions of blockchain have emerged. The changes involve restricting write access and read access to trusted nodes. Now, a total of four approaches exist. The needs of the application drive the appropriate choice.