Blockchain’s Distributed Ledger in Supply Chain Can Be The Game Changer

By Roman,freelance writer.

"You either implement blockchain or you disappear," said Fred Smith, CEO of FedEx, at an international conference three years ago. It is worth saying that in this case, he was talking about supply chain management (SCM). And this is not strange, since blockchain can solve four main problems:

- inefficient management;

- poor traceability;

- lack of compliance;

- lack of flexibility.

Walmart, Amazon, IBM, McDonald's, Starbucks, and Apple are already solved SCM issues with blockchain technologies. Their cases are successful and illustrative, so we decided to tell you how to implement new technology in supply chain management so that you can use this guide and your business will not be among the depressive ones.

Do you even need a blockchain?

Despite the great possibilities of blockchain and smart contracts, you should not implement them all unnecessarily. There is a list of precise questions that will help you understand whether the new technology will help your business:

- Do transactions interact with each other?

- Are transaction interactions time-sensitive?

- Are there intermediaries and do they add complexity?

- Is the data shared between multiple parties?

- Is the data updated by multiple parties?

- Are the data checked according to formal criteria?

Let`s consider the main steps to implement Blockchain's Distributed Ledger in Supply Chain:

Step 1: Defining the use case.

Decide how you intend to improve your supply chain management. To do this, formulate a use case — a simple but detailed description of the"application points" of the blockchain and the goals to be achieved. You do not need to describe the technology itself, only its possibilities for improving SCM concerning your situation.

One of the most famous examples of the use case for SCM is the Walmart Food Traceability Initiative. The corporate giant has used IBM's blockchain solutions to track products as they move along the sales chain from the farm to the shelves in supermarkets. In particular, thanks to this, it was possible to reduce the time of tracking the origin of products, increase the level of customer confidence and reduce logistics and SCM costs.

Step 2: Develop the architecture.

Now you need to identify the key blockchain practices that are necessary to achieve your goals: the consensus mechanism, the authentication mechanism, data privacy, the complexity of algorithms, and so on. To do this, you need to analyze the use case, giving detailed answers to such questions:

- What technological solutions will help you achieve your goals?

- Which parties are interested in the blockchain and what will they gain?

- What are the roles and responsibilities of the participating and interested parties?

- What data is of interest to participants and stakeholders?

- What are the data inputs/outputs and which Dapps produce and/or consume them?

The answers to these questions will help you understand what kind of blockchain is needed (decentralized, centralized, or combined), whether a separate platform is needed, how global the project (or platform) should be, and whether a utility token is needed.

Step 3: The App development

Next, it is necessary to decide who will be engaged in the development and implementation of the blockchain:

- Outsourcing company. Hiring a blockchain developer company that will create and integrate blockchain technologies into sales chain management. The best option, if there is no time to understand all the subtleties and details of the process.

- Internal development. Hiring a staff of blockchain developers is expensive and requires a lot of effort to find and establish coordination. Suitable for those who understand these processes. Gives you full control over the development.

- Blockchain-as-a-Service (BaaS). A proposal that allows you to use ready-made cloud blockchain solutions for implementing your own dApps and smart contracts. Such services are offered by Microsoft, IBM, and Amazon. BaaS accelerates the implementation of the blockchain but makes it more difficult to change the service provider in the future (vendor-lock). This path was chosen by Unilever and Nestle.

After choosing the development approach, you need to write a Roadmap — a step-by-step plan for integrating the blockchain into the supply chain. It should include the development, testing, improvement, and deployment of the software product, as well as actions aimed at raising funds and promoting, if necessary.

It is also necessary to consider the issue of cybersecurity: what funds will be used in your blockchain solution? Which antivirus software should you choose? Will you need to use a VPN in your workplace? These questions have already been investigated by IT specialists more than once. So, Chase Williams lists down the top VPNs for Windows, perhaps one of these VPNs is suitable for your blockchain solution.

Step 4: Deploy the blockchain.

After the successful testing of the SCM blockchain solution, the project analyzes the results achieved and the development process. Bug fixing is implemented, errors identified during tests in action are corrected, new functions are added, and the user interface is improved.

Then another test is performed - pre-release. If it is successful, the development team and the customer deploy the blockchain, implementing it in the rest of the sales chain management elements. This is done in stages: product by product, chain by chain. All participants are connected to the system.

A few final words.

Managing today's supply chains is an extremely complex task. Blockchain can increase the efficiency of supply chains and positively impact every process from warehousing to payment.

When developing an SCM use case, you should think about integrating not only the blockchain but also other technologies that will help develop the potential of the distributed ledger and smart contracts. For example, you can integrate deep neural networks ("applied" artificial intelligence) to optimize logistics paths, find errors, inconsistencies, or other things.

Author:
Roman is a copywriter and a content marketing expert with 10 years of experience, whose main specialty is technical, technology and business writing.