Of all the areas in which blockchain applies to commerce, supply chain applications are the furthest along in development and usage. This stems primarily from the database-like features of blockchain combined with traceability and security benefits, which are a natural fit for reducing costs as well as ensuring that a company fulfills its brand promise for product sourcing or quality.
Most of the blockchain projects in the retail supply chain space are “private.” Companies are building their own blockchains for themselves and their supply chain partners and are otherwise not available for others to use or copy.
To date, mostly large retailers have developed these projects due to costs. For example, Walmart uses blockchain technology to track food products through the entire supply chain to identify the source of food-borne diseases and take quick action. Target recently announced its blockchain initiative, called ConsenSource, to certify and audit suppliers for the company’s paper manufacturing.
Both retailers have not only the resources to build a blockchain from scratch but also the power to ensure adoption from their supply chain partners. But other large retailers, supported by supply chain consultants such as Deloitte and PricewaterhouseCoopers, are looking to the blockchain to improve the financial viability and lower the risk of their supply chains.
Moreover, initiatives are underway to develop public supply-chain blockchains. Notably, Ernst & Young, another consultant, placed its new Nightfall software — based on the Ethereum blockchain — in the public domain so that any company can use it without investing development resources. Also, dozens of startups are using the blockchain to tackle different aspects of the supply chain, especially in the following areas.
In short, blockchain is transforming the supply chain. An organization called Blockchain in Transport Alliance, with nearly 500 members, is dedicated to enabling and encouraging the process.
Retailers may find that blockchain can reduce their supply chain costs, locate financing, and ensure the quality and traceability of their products. An investment now while in the early stages could pay huge dividends.
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