Big Brother is Watching Your Supply Chain

Blockchain technology will enable both manufacturers and their customers to watch products move through the supply chain.

Blockchain is being used today to track products and their ingredients backwards and forwards through every stage of the supply chain. In addition to improving responsiveness to product recalls, companies can ensure product quality and shorten delivery times, while also enabling customers to watch in real-time as their items move through their manufacturing lifecycle.

The concept of Blockchain technology is simple. Every time factories, distributors, shippers, warehouses, and retail stores log a transaction related to an item, such as a product being placed on the shelf, all the data points are linked together to form a chain, and copies of this data appear across multiple devices. Since the record lives in multiple locations at once, it is extremely difficult to edit, change, or forge, and it can be referenced much more quickly, and with greater confidence, than traditional record keeping.

Blockchain in Action

Over 500 global fleet, shipping and technology companies, including UPS, FedEx, and Daimler, make up the Blockchain in Transit Alliance (BiTA) chartered to promote standards for tracing products through the supply chain. Blockchain is also being piloted by the pharmaceutical industry to track and trace drugs from the shop floor to the retail store. By 2023, the Drug Quality Security Act (DQSA) will require an electronic interoperable system that can pass serial numbers between trading partners.

Here are a few examples of Blockchain solutions that have been implemented successfully.

CargoX’s platform uses its Ethereum network to reduce B/L (bid of lading) processing time from 5-10 days to just 20 seconds by eliminating time-consuming, cumbersome, inefficient manual processes that are dependent on paper legal documents, 60-year-old electronic data interchange (EDI) technology, e-mail, fax, and courier.

FedEx has been conducting a proof of concept with “sensor-based logistics” using Internet of Things (IoT) sensors the size of a stick of gum that transmit back to a Blockchain ledger information on whether a package has been opened, its internal temperature, and how much vibration it’s experienced on its journey.

The TradeLens project is a Blockchain-enabled technological solution created by Maersk and IBM that boasts 20 port operators controlling 234 docks on five continents. The trial solution for the technology claims that it was able to reduce shipment time by roughly 40% by making it possible for the participants to broadcast the status of a container in a supply chain in real-time.

Roadblocks to Blockchain

Blockchain on its own isn’t an answer. It needs to be integrated with other systems such as ERP to connect with systems that track sales, financial, and manufacturing processes. Making this data transparent to the ERP system helps companies react quickly in the event there is a product recall, including all products that include a particular material, and all products that are marketed under a different name. By tracing product quality issues, all the relevant parties can be automatically notified, replacement parts can be automatically ordered, and when necessary technical staff can be notified and scheduled to conduct a service call.

In addition, by sharing data from Blockchain solutions with ERP systems, exact product locations can be communicated with customers. Walmart upgraded its ERP system with Blockchain technology to track the journey of a mango from the very tree it was picked, to the packing house, cold storage facility, and distribution center, through to its final destination, on the retailer’s shelves.

Blockchain technology is already being used as the missing link to track products through every stage of their product lifecycle. Even though it will take time to work out common standards and interoperability issues, the power to track every step of the supply chain will eventually cause it to be integrated with ERP systems to improve product quality and customer service.

Written by:  Andres Richter, CEO of Priority Software, a provider of ERP solutions, for MH&L.