For several years, Walmart, McDonald's, IBM, FedEx, Alibaba, Starbucks and many other well-known brands have been using blockchain to optimize their supply chains and require the same from partners, as new technology can save billions of dollars, simplify workflow, eliminate errors and inaccuracies as well as increase customer confidence.
As FedEx CEO Fred Smith said at the Consensus 2018 conference: “You will either implement blockchain or disappear!” And today we will describe how to do it - how to implement blockchain in the supply chains of your business. What is needed for this, who should do what and what problems you may encounter.
Does your business need blockchain?
World Economic Forum rapid test on whether your business needs blockchain
Blockchain and smart contracts
are great technologies, but you don’t need to implement them in your business. It is possible that in your case these innovations will not be useful, for example, if your partners and counterparties in the supply chain do not agree to use the blockchain
on their side.
It’s also not worth introducing blockchain if:
- your logistics and supply chain are fairly simple (short);
- your business is tied to cash and / or personal ties and the transition to the “number” is undesirable for your partners (typical for developing countries);
- your logistics generates data that is impossible or too difficult to bring to a single standard and / or formalize.
If the above items are not your case, you can safely proceed with the implementation of the blockchain in the supply chain of your business. This will require from a couple of months to a year of real time, depending on the scale and complexity of your logistics. To speed up and simplify this process, use our step-by-step instructions.
Step 1: Defining Use Cases
The first step in implementing the blockchain is to decide how exactly you will use it. It is not necessary to describe the technology itself at this stage, only use cases. A simple example is Walmart's Food Traceability Initiative. The trading network, together with IBM, created a blockchain to track the life path of food products from the manufacturer to the shelves in supermarkets.
Their platform collects information about:
- the manufacturer (name, location, technology and equipment);
- carriers (transport, equipment, route, transportation conditions);
- involved parties (name, status, history of cooperation, etc.);
- product (ingredients, shelf life, storage conditions, etc.)
Walmart launched this project to track counterfeit, spoilage and fakes, as well as in the case of force majeure, such as in the case of greenery infected with E.coli, to quickly track the source of infection and infected lots. Provenance, MediLedger and TE-Food startups went along a similar path.
How Walmart uses blockchain in its food supply chain
But this is not the only way to use blockchain in supply chains:
- Maersk and GSBN have created global blockchain platforms that could potentially become the standard for all market participants.
- Alibaba and JD use the blockchain to track the authenticity of food products, baby products, luxury goods and alcoholic beverages.
- UPS is developing a blockchain to streamline billing and workflow.
- FedEx launched a blockchain project to store shipping records to use this data as a source of truth during dispute resolution.
- Tallysticks and Blockshipping blockchains are focused on optimizing cash settlements in logistics and supply chains.
Define use cases for your business and move on according to instructions.
Step 2: Attracting partners to the project
As a rule, about 30 counterparties participate in global supply chains, up to 10 in local ones. When implementing a blockchain in a specific supply chain,
it is necessary to ensure that they all also start using the new technology, since without this the “history” of goods will be incomplete.