Today, blockchain is best known as a cryptocurrency platform, but its next big splash may be in protecting supply chains vulnerable to hacking and theft.
In 2017, Frank Yiannis, Walmart’s vice president of food safety, undertook an informal experiment. He plucked a package of sliced mangoes from a Walmart shelf and asked his staff to find the exact origin of the fruit. It took his team nearly a full week of research to pinpoint the farm source.
In the months that followed, Walmart launched a trial program tracking produce across its supply chain using blockchain technology. Another package of mangoes, another experiment—but this time it only took staffers 2.2 seconds to find the origin of the mangoes, as well as every location, date and time of its handling throughout its journey from farm to store shelf.
Beyond its implications for food safety, Yiannis’s experiment offers a glimpse into how deeply blockchain may transform the supply chain as we know it: eliminating waste, streamlining logistics, and, perhaps most significantly, ensuring security at every stage. For developers tasked with building the underlying systems needed to keep the supply chain humming, this could be a game changer.
“Blockchain technology allows a company to track a product throughout the entire lifecycle of a transaction in a more predictable, safe and secure way,” says Basel Ismail, a blockchain educator and the CEO of Blockgram, a recruiting firm that pairs blockchain experts with companies that need them.
The supply chain is fraught with security risks, from product contamination to theft. Until now, it’s been up to IT teams to self-regulate technology used in supply chain or logistics management. This can expose them to hacking: For example, the massive 2013 Target data breach that ultimately put 41 million customer accounts at risk began with a phishing attack on a subcontractor, a relatively small player in Target’s supply chain.
Blockchain could mitigate those threats by adding transparency into every transaction. Quite simply, it would shine a light into every dark corner of the supply chain.
A Ledger Without a Doubt
Blockchain’s key appeal is that it provides a decentralized, distributed database (or ledger) that records transactions unalterably and makes them accessible across an entire network. That makes a blockchain ledger essentially “unhackable,” Ismail says.
“IT and security teams at every part of the supply chain can see all of the transactions,” he explains. “This makes security threats or fraudulent transactions faster and easier to trace. The way things are today, companies are relying on someone else’s data and code, which introduces doubt into transactions.”
With blockchain, however, no doubt exists. Everyone—from front-line operations managers to IT teams monitoring transactions on the back end—will know exactly how much product left the point of origin, how much arrived at the end terminal, and each step in between.
This transparency could become even more valuable if consortiums of companies (say, all major retailers in the United States) can agree to a framework for an industry-wide blockchain network. Nascent efforts at this scale of coordination are already underway—just last month IBM and global shipping giant Maersk announced a partnership with 94 international companies to launch TradeLens, a shared blockchain platform for supply chain management.
Overcoming Blockchain’s Roadblocks
While the potential benefits of blockchain are clear, its adoption to date remains narrow. According to a 2018 Third-Party Logistics Study, 30 percent of third-party logistics companies and 16 percent of shippers recognize that blockchain could improve their operations, but they have not yet engaged with the technology.
So what would it take to get more developers to leverage blockchain in order to build supply chain management tools? Ismail says that the first step is educating IT teams about the value of blockchain and how to use it. It may also require bringing in new talent, like senior software developers or engineers who have undergone blockchain training.
“Right now, blockchain seems like a very obscure, confusing and overwhelmingly complicated field, but it doesn’t have to be,” Ismail says. “I spent the majority of last year focusing on education and development, because there’s so much interest but no formal body of knowledge yet.”
The lack of infrastructure to support blockchain technology may be another barrier to adoption, as many companies that are interested in the technology can’t easily integrate it into their existing tech stack. With blockchain, Ismail advises companies to begin with small steps.
“There is an infinite number of possible applications of blockchain when it comes to supply chain management, like letters of credit, sales contracts, invoices and payment confirmation,” he advises. “Start by looking at where you can benefit the most from having accountable, transparent transactions.”