Blockchain Technology’s Influence on Supply Chain Integration
Today in class, Joshua Pucci’s lecture discussing his role in Supply Chain Integration as a Transportation Finance & Analytics advisor at Owens & Minor helped frame a lot of the concepts we have learned in class in a real-life setting. I was particularly interested in the idea of blockchain, and its potential to increase the efficiency of supply chain integration.
One example of this is the pharmaceutical industry. As the industry has continued to grow, it has faced some problems managing its complex supply chain. These have included lost ingredients in the supply chain, wrongly prescribed medicines from faulty computer systems, and counterfeit medicines from security breaches.
Blockchain offers a chronological ledger that securely records transactions in a chronological order between several parties. In the pharmaceutical industry supply chain, products change ownership from suppliers, manufacturers, and distributors. They are then repacked and sent to wholesalers before reaching the final customer. As a result, the authenticity of any product from start to finish is hard to verify. This can cause severe damage to the customer relationship process, and even worse, could cause actual harm.
Using blockchain, companies can increase transparency across business units, allowing each unit to track products throughout the supply chain. Optimized blockchain security would allow only trusted parties to grant access to add information to the blockchain. It would show activities in real time, and instantly notify when illegitimate drugs or unauthorized edits are found. The blockchain would have a customized identification tag for each unit of medicine, allowing an efficient transfer of ownership between business units all the way from suppliers to consumers. As each unit records information on the blockchain, all parties in the supply chain process can scan the barcode to see the path and history of the product.
Blockchain’s potential to improve the industry is tremendous. It will allow for end-to-end transparency, regulatory compliance, and data security. It will increase profit margins and create higher on-shelf availability of products. This will not be an easy task, however, as Mr. Pucci described today. Implementing a global operation will require significant investment and time.
There are other examples of blockchain’s technology already being put to use in other industries. ShipChain Inc., a blockchain technology company recently signed a partnership deal with CaseStack, a supplier of supply chain management services. They will launch a pilot program this summer to integrate tracking and tracing using ShipChain’s blockchain based platform. CaseStack works with some of the world’s largest retailers- Target, Duracell, and Amazon. This integration program will allow ShipChain to implement their tracking platform and driver rewards program with the more than one million loads CaseStack transports every year to major retailers.
Blockchain’s presence in supply chain integration will undoubtedly become more prevalent. It will be interesting to see not only how quickly that will happen, but how successful and how “disrupting” the technology will be to the industry.
Benjamin,
Thank you for your thoughts on Blockchain and the multiple ways it could be an industry disrupter for the Pharmaceutical industry. You did a great job of expanding on the concepts that our guest speaker briefly spoke about. THe Pharmaceutical industry is a great example of an industry that could be helped vastly because it has such a complex supply chain with so many different hands that have to touch the product before it ends up with the end customer.
I read an article that further discusses the benefits of blockchain for the supply chain. It explains that because blockchain technology allows more secure and transparent transactions, every transaction will be documented to create a history of the product from the manufacturer to the sale. This would reduce time delays, added costs, and errors along the supply chain. These are the very concepts we speak about in class that supply chain managers must work towards improving and reducing.
Many shippers and transportation companies are looking for ways to integrate concepts of the blockchain with the supply chain to increase profit, efficiency, and relationships with the client.
SOURCES: https://www.loaddelivered.com/blog/why-blockchain-is-a-game-changer-for-supply-chain-management/
Ben,
Listening to Joshua Pucci’s talk was actually very interesting, as I did not understand blockchain that well. I can see it being useful for many, without many drawbacks. While nothing is perfect, I find it hard to find a way that someone could seriously exploit this. This will allow companies to show exactly where the product has been and is going. As for being disruptive, business owners who are actively going against blockchain likely have something to hide in their supply chain process. There are some issues with being completely transparent, since that can give away information that companies are using to have a competitive advantage, but unless a company has something that is incorrectly being recorded on purpose, it is hard to find a reason to be against blockchain.
Ben,
I’m glad you brought up this exciting new addition to the supply chain world. Blockchain is only the most recent in a series of developments that has trickled its way down from the tech world to the business world. We talked a lot about disruptors in class and how they can revolutionize the way businesses are operated and how products themselves interact. One example of this is the internet of things (IOT). This has been hugely influential for producers rethinking the way that their products interact with the world. The internet of things is basically when all of your devices can connect to the internet and interact with each other. For example, Amazon’s Alexa or Google Home devices tap into the internet of things to control lighting systems, refrigerators, coffee makers, toasters, locks, light shades, and virtually anything else you can think of. This interconnectivity has forced producers and manufacturers to rethink the way that their products can interact with the internet of things and made them innovate and redesign their products. Another example that we now take for granted is Artificial Intelligence or AI. This has been transformational in the business world as now AI’s are able to run programs and analyses way faster than any human would. In the sales world, AI can pre-screen leads and make suggestions to the salesman to increase success. It even helps supply chain professionals notice trends and potential hazards to their supply chain before they occur to mitigate their impacts.
Those are just two examples of technologies being massively disruptive to the business world and encouraging and enabling innovation to improve efficiency of their processes.
Ben, your blog post is particularly interesting and I am glad you have decided to speak about this. The use of blockchain it the most revolutionary change to supply chain in the recent age and it is important to analyze. I am glad Dr. Youngblood brought it up in our discussion briefly but I think there is still so much more to learn. At least for me specifically. Obviously, blockchain has gained much of the recognition it has today because of the use of bitcoin. Bitcoin is a digital currency that is backed by no asset of government body therefore its price and value is solely determined by supply and demand. This type of currency is called “decentralized” and therefore is not subject to the types of inflationionary factors that government backed currencies are. Additionally, there are only a certain number of “coins” in existence therefore scarcity plays a role as well.
I hope that in the future, the University of Richmond Business School will be able to provide resources to students interested in these types of technology and learning about them. It is likely they will play a significant role as disruptors to our economy in the future and it will be important to be aware of their processes. A significant application for blockchain could be within the stock market itself. The exchange of securities is highly regulated at this time and the implementation of blockchain into our trading system could prevent abuse and lessen the resources needed by certain regulatory bodies to maintain a fair and equal capitalistic trading system.
https://en.wikipedia.org/wiki/Bitcoin
Ben,
Although many people refuse to believe so, block-chain is the future for companies worldwide. Slowly but surely, block chain is washing away the bad reputation cryptocurrencies gave it and it’s moving towards becoming a very important tool for enterprises.
Looking on how companies are applying blockchain into their daily operations, I found an interesting article on the International Business Times online magazine about different projects that could possibly be revolutionizing, which include this new technology.
Firstly, Coca Cola as well as other companies are trying to create a registry for sugar supply-chain workers in foreign countries to ensure that employers are honoring their scope of work contracts. This, with the help of the State Department, would force companies to actively state who are they employing, helping decrease child labor, forced labor and land rights violations. Another important technological advancement using blockchain is being done by Microsoft. The software company is trying to develop decentralized IDs within their Authenticator app. This would help over 1 billion people worldwide to identify themselves more easily on banking services, businesses and health providers, just to name a few examples.
Although there are more projects involving blockchain, these two are the ones I found the most interesting and that I believe will not only change how companies work but also our everyday lives. It is only a matter of time till we see the effects!
http://www.ibtimes.com/3-most-ambitious-blockchain-projects-2673087
Brian,
Your inclusion of the comments made by Dr. Youngblood and the article you cited regarding the relationship between blockchain and Bitcoin is really interesting, and an incredibly relevant part of any conversation about blockchain. It was apt of you to touch on this.
I believe that you’re right in your assessment that Blockchain will be able to distance itself from Bitcoin in the coming years—Ben’s post is great example of an industry that has been able to separate the benefits of blockchain from the hysteria surrounding Bitcoin. Other industries have made similar moves to incorporate the benefits of blockchain’s secure ledger technology to remove inefficiencies, decrease costs, and improve reliability.
One of my favorite examples of blockchain implementation is in the energy sector. At my internship this past summer, I learned about LO3 energy, a “start-up focused on building blockchain-backed smart-grids for local energy trading,” (Fortune). The venture-backed start-up’s most prominent project to date has been the development of a smart-grid in Brooklyn, New York (Fortune).
My understanding of LO3’s business model is below:
LO3 helps local neighborhoods, towns, and cities build and connect smart-grids. These smart grids often produce energy through rooftop solar panels. Then, using LO3’s technology and blockchain platform, neighbors can buy and sell the energy that is produced by these rooftop solar arrays. For instance, if my neighbor has solar panels and they are on vacation (and therefore not using the energy produced by them), I can buy that electricity from my neighbor. The price of this solar-generates energy—from what I understand—often cheaper than the energy that local utilities are delivering to customers.
The Fortune details the role that LO3’s technology and blockchain platform plays in this exchange. LO3 smart meter technology can “track energy usage at certain times of day, or by specific applicances…an app lets [users] set buy or sell requests for specific kinds of energy (i.e. solar or wind),” (Fortune). The blockchain platform underlying this technology can “automate real-time, granular, peer-to-peer energy transaction,”—in essence it ensures the validity and reliability of these transactions (Fortune).
As firms like LO3 continue to grow and their use of blockchain becomes integrated in our daily lives, the separation of blockchain from the Bitcoin mania will likely accelerate.
Words: 374
Links:
Fortune: http://fortune.com/2017/12/24/siemens-blockchain-lo3/
Ben,
Thanks for sharing your thoughts on Joshua’s thoughts on Tuesday and our look into blockchain in class. I think Dr. Youngblood brought up a great point about blockchain’s relationship with Bitcoin, which creates a negative and unstable imagine of blockchain. I recently read an article about Bitcoin and the future of the cryptocurrency. In this article, the author writes, “Its future will likely be as unpredictable as its past given that it’s a currency propped up by risk-takers, a target of lawmakers and tied to nothing more substantial than an algorithm” (the rest of the article can be found here: http://theconversation.com/bitcoins-wild-ride-and-whats-ahead-for-the-cryptocurrency-94801). Bitcoin has thrived on risk-takers and investors buying on simply momentum. Therefore, I believe that blockchain will be able to slowly separate from Bitcoin moving forward.
Additionally, the effectiveness and increasing uses for blockchain will allow for this separation to take place faster. It begins with companies realizing the usefulness of a blockchain system. Once companies begin this adoption period, others will follow and eventually the consumers will see the true value of blockchain, instead of simply a word that triggers thoughts of Bitcoin.
Finally, it is possible that this separation has already begun to take place. A great example of this in the real world is a small tech company out of the UK that changed its name from On-Line PLC to On-Line Blockchain PLC. One article writes, “That seemingly insignificant move had a massive and almost instantaneous impact on the company. Within 24 hours, its share prices rose by 394 percent. Within 48 hours, its value had grown more than it had in all the past two years combined” (the rest of the article can be found here: https://www.digitaltrends.com/computing/beyond-bitcoin-how-blockchain-will-reshape-the-future/). Unlike the skepticism around Bitcoin, blockchain is seemingly here to stay and grow. One last quote that sums up blockchain well is this from the Harvard Business Review: “Blockchain is not a ‘disruptive’ technology, which can attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly. Blockchain is a foundational technology. It has the potential to create new foundations for our economic and social systems.” (https://hbr.org/2017/01/the-truth-about-blockchain).