Blockchain use cases in supply chain
One is healthcare. Another is supply chain. For example, one shipment of refrigerated goods from East Africa to Europe can pass through roughly 30 people and organizations, with more than interactions among them, according to shipping giant Maersk. Blockchain technology can help ensure provenance, providing traceability across the supply chain. This can thwart counterfeiters and ensure safety.
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Content:
- Using blockchain to drive supply chain transparency
- Blockchain in Supply Chain and Transportation: Benefits, Use Cases, Limitations, and Opportunities
- Blockchain technology for supply chains—A must or a maybe?
- Intelligent Smart Contracts for Innovative Supply Chain Management
- Blockchain in The Supply Chain Use Cases: Proof of Quality
- Blockchain in Procurement and Supply Chain
Using blockchain to drive supply chain transparency
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When the coronavirus crisis erupted in , it became apparent that the medical emergency was accompanied by severe shortages, especially in some medical devices. The pattern was first observed for ventilators : demand spiked everywhere and the supply chain was disrupted. This was because production of the devices spanned multiple countries, with each part dependent on other parts manufactured in different locations.
The longer the chain and the more complex the dependence, the greater the exposure of any point to the disruption of another one, and to mandated shutdowns.
Now, two years since Covid first hit, this pattern has affected almost every sector of the global economy. But why has Covid had such a severe effect on how we receive products and goods? In recent decades, supply chains became lean, and they lengthened as they became more cost-efficient: more and more steps were added in the manufacture and transportation of any given product in the name of speed and cost.
This means there are more and more places where something can go wrong between you ordering something online and it arriving to your door. Today, downstream suppliers — such as those who provide vehicle control systems to your car manufacturer — depend on upstream suppliers — such as chip manufacturers — to deliver on time so they can in turn deliver on time to you. Supply chain problems have a knock-on financial effect known as trade credit contagion.
This is where firms delay payments to suppliers because their customers delay payments to them. The pay-on-delivery model can lead to cancelled or delayed shipments which can in turn lead to bankruptcies. Blockchain is an early-stage technology that enables the decentralized and secure storage and transfer of information and value.
Though the most well-known use case is cryptocurrencies such as bitcoin, which enable the electronic transfer of funds without banking networks, blockchain can be applied to a wider range of purposes.
It has potential to be a powerful tool for tracking goods, data, documentation and transactions. The applications are seemingly limitless; it could cut out intermediaries, potentially reduce corruption, increase trust and empower users. In this way, blockchain could be relevant to numerous industries.
That said, blockchain also entails significant trade-offs with respect to efficiency and scalability, and numerous risks that are increasingly coming to the attention of policy-makers. These include the use of cryptocurrency in ransomware attacks, fraud and illicit activity, and the energy consumption and environmental footprint of some blockchain networks. Read more about the work we have launched on blockchain and distributed ledger technologies — to ensure the technology is deployed responsibly and for the benefit of all.
While a high proportion of trade credit risk remains uninsured today, a post-pandemic world may see insurance and reinsurance firms fill in this protection gap. Researchers are currently working to develop methodologies to identify vulnerabilities in global supply chains and to understand their trade credit contagion risks. The goal is to make these systems more robust overall. How can we design ways to design insurance and reinsurance contracts in order to effectively share the risk and mitigate vulnerabilities?
How can reliable trade credit lead to fewer delays in supply chains and replace the familiar predicament we face now, of paying for something in advance with an unknown delivery date? Artificial intelligence and complex network theory are helpful in identifying the structures that could pose systemic risk. They help us ask: which patterns of connections are likely to lead to delay and trade credit contagion and which are more robust? Using these tools, we can create large-scale simulators of global supply chains responding to a wide variety of shocks and then use machine learning techniques to detect the problematic parts of the chain.
This knowledge can then be used in market designs that strengthen the system before another pandemic or disaster occurs. Other novel technologies such as blockchain bring the promise of using high quality data to analyse supply chain dependencies. In combination with other features, such as smart contracts, this could lead to timely resolution in cases of disputes along the supply chain.
My research involves using blockchain to streamline record-keeping and payments. This problem is challenging because the adoption of blockchain depends both on the specifics of the technology and the cost. The problem of adopting technology in the presence of positive externalities whereby firms adopting the technology in turn improve the operations of external parties is an old one in economics, but now these externalities are systemic in nature: the effects propagate along the chains.
The cost of the technology depends on how many firms adopt it, and each one faces business specific costs based on its position in the supply chain, its risk tolerance and its costs to insure these risks. Real-time recording keeping, the traceability of transactions, and the immutability of blockchain can all help supply chains become more efficient.
This is all the more true if we consider the full length of the chain, where transactions need to be verified by several parties: participants in the supply chain, insurance and reinsurance firms. Trade credit insurance is likely to grow after the pandemic. It may rely on private-public partnerships — the pandemic has shown that governments become important players when they impose shutdowns in certain areas. These funds can be used to make up for payment delays, reduce losses and jump-start critical production where necessary.
But not all links in a chain can be insured, and an important challenge is to identify the most important stages under different shock scenarios.
Supply chains can also be rewired — large-scale algorithms can identify which suppliers need to be replaced and which new ones need to emerge. In a few years, supply chains may look different, as the overall goal shifts from minimising costs, as was the case before the pandemic, to minimising delays and trade credit risks.
The end consumer will drive the need to rewire the network, as demand shifts. Ultimately, the flexibility of the customer determines the resilience of the supply chain. This article is published in collaboration with The Conversation. The views expressed in this article are those of the author alone and not the World Economic Forum. The Forum has been piloting sustainable investment facilitation in several countries to help tackle shortfalls in sustainable foreign direct investment.
Data only has value when it is shared — a process that could be accelerated by creating stock exchange-style markets where it is freely traded. I accept. Take action on UpLink.
Forum in focus. Global Alliance speeds up international trade — unlocking investment and growth benefits. Read more about this project. Explore context. Explore the latest strategic trends, research and analysis. Artificial intelligence and complex network theories are being utilised to identify those most at risk. Supply chain disruptions throughout the pandemic. With long chains, risks are now shared between multiple entities all around the world.
What is the World Economic Forum doing about blockchain? Have you read? License and Republishing. Written by. More on Trade and Investment View all. The world is drowning in data. Why don't we trade it like on a stock exchange? Join the Forum.
Blockchain in Supply Chain and Transportation: Benefits, Use Cases, Limitations, and Opportunities
From optimising the supply chain to machine-led maintenance, explore the top 5 blockchain use cases in manufacturing On top of the numerous and unexpected challenges presented by Covid over the past 18 months, the global manufacturing sector has a number of long-standing issues that continue to cause problems for the industry. These include its complex infrastructure and supply chains with an increasing number of players, and the need for both digitisation and continuous improvement in order to stay profitable. Now, though, blockchain use cases in manufacturing are emerging as a real solution for many of the challenges in the manufacturing industry. As the manufacturing industry begins to realise the potential of blockchain, applications of the technology are revolutionising the sector by creating supplier ecosystems, providing better oversight of entire supply chains, removing fraud, and delivering improved oversight of internal processes. A blockchain is a database that contains blocks, each of which holds information.
Blockchain technology for supply chains—A must or a maybe?
JavaScript is disabled for your browser. Some features of this site may not work without it. Toggle navigation. Blockchain technology in supply chain and logistics Author s Agarwal, Shweta, S. Massachusetts Institute of Technology. Download Full printable version Other Contributors Massachusetts Institute of Technology. Integrated Design and Management Program.
Intelligent Smart Contracts for Innovative Supply Chain Management
The potential of blockchain is growing and how! Not only the disruptive technology is quickly gaining momentum, but it is also now being explored for agriculture , real estate , banking and more! In this particular article, we are looking at the scope and applications of blockchain for supply chain and logistics. Moreover, the present limitations of the traditional supply chain management system and how to overcome each one of them by leveraging blockchain technology. Supply chain management is a billion-dollar industry.
Blockchain in The Supply Chain Use Cases: Proof of Quality
Supply chain has widely been identified as the industry sector other than financial services where blockchain will play a major transformative role in the near term. The reason behind this perspective is easy to understand. The supply chain has traditionally been a relatively more chaotic aspect of global trade involving myriad regulations, paperwork and participants who are spread across the world. It is also largely an opaque system with real accounting and accountability happening only at specific pre-decided checkpoints. Blockchain or Distributed Ledger Technology DLT is widely hailed as the next technology wave for the supply chain industry that will solve most of these existing problems.
Blockchain in Procurement and Supply Chain
The general deliverables for the PoC will include the following:. Architecture of the end-to-end systems required to achieve the solution s. Suggested approach for what data should be captured and stored on chain vs. Detailed information about the technology see section IV. Objectives , including: a the consensus mechanism that will be used and ability to configure the parties participating in that mechanism; and b baseline performance metrics e. Recommendations for additional complementary technologies to support data verification and authenticity. Lab prototype or simulation of the proposed solution to be sent to the World Bank Innovation Lab team within two or three months of signing the Collaboration Agreement. Through this REI and the resulting collaboration with interested parties, WBG expects to develop a PoC, including development of a prototype, for an oil palm traceability use case.
Blockchain has the potential to transform healthcare in general and the pharmacy supply chain in particular. The distributed ledger technology could offer legislative, logistical and patient safety benefits for pharmaceutical supply chain management. From a regulatory perspective in the United States, blockchain technological and structural capabilities, in fact, extraordinarily map to the key requirements of the Drug Supply Chain Security Act. The DSCSA outlines a year timeframe that will require elements including medication track-and-trace, product verification and notification of stakeholders about illegitimate drugs.
N2 - Since Bitcoin's debut in , blockchain, the technology behind the cryptocurrency, has been gaining increasing scientific and industrial interest. Due to the technology's innate distributed and immutable features, the adoption of blockchains on supply chains is one of the most promising recent applications. In this survey, we review academic researches and implementations of distributed ledgers on supply chains. We present the current state of research on the subject and summarize the benefits and the challenges of the distributed organization and management of supply chains. Focusing on industrial practices and use cases, we discuss the technical characteristics and maturity of the various industrial projects. Our goal is to assess the applicability of blockchains in the supply chain domain and to provide a foundation for practitioners and researchers to direct their future projects towards improving the technology and its applications.
Can a supply chain ever be truly sustainable? With evermore complex supplier networks, it is almost impossible for producers to guarantee their products are per cent responsible. So, could blockchain be the answer? Francesca Cassidy ,. Was the cobalt in your phone dug up by a child miner or the cotton for your clothes farmed by slave labour?
In this article, you will learn about the role of blockchain in supply chain management. Calling blockchain one of the most disruptive technologies to ever be invented is not an understatement. Integrating blockchain in any industry can enhance its proceedings, and the article will talk about the Supply Chain Management circle. The sector has come a long way in a few years and nowadays, it can garner a global reach.
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