In our last blog below, we discussed blockchain and how Next Generation Logistics (NGL) is involved as a leading provider of blockchain supply chain technology. However, there is still much confusion about understanding its value in practical terms. Without all the tech talk, here are three practical business applications you can share with colleagues at work or at your next summer BBQ on how blockchain can transform the modern supply chain.
Reason #1 - "As a Tool for Food Product Safety"
From Salmonella about papayas, E.coli in lettuce last year to recent announcements from Chipotle about people getting sick, food safety has been top of mind for everyone involved in the food supply chain. In fact, the World Health Organization estimates that almost 1 in 10 people become ill every year from eating contaminated food, with 420,000 dying as a result.
As a form of prevention in the US, in 2011 the FDA created legislation called Food Safety Modernization Act (FSMA) to ensure that consumers and animals are protected from the unnecessary risks they have become exposed to by shifting the focus of federal regulators from responding to contamination to preventing it. But since this law was enacted, companies have been focused revamping their data management and auditability processes across an often-complex network that includes farmers, brokers, distributors, processors, retailers, and consumers, which sometimes referred to as farm to fork
Furthermore, the burden on small and medium sized businesses has brought to light the necessity of technology at every level of the food business and for businesses of any size for managing needs like document control, workflow, training, track and trace, monitoring and verification, recall and response, supplier management, foreign supplier verification.
With blockchain, accountability, traceability and quality assurance can be raised to such a level that companies of all sizes can react to issues with the speed necessary to prevent additional people from getting sick, all while improving the compliance capabilities that benefit the businesses supporting those supply chains.
Reason #2 - "As a Tool for Transparency" (Farm To Fork)
In the past few years there has been a raised concerned to better understand the source from where we get our goods. Raised awareness of social responsibility is reflected in both consumer behavior and regulatory compliance that has pushed the desire for more legislation to protect business and consumers.
Sometimes referred to as corporate social responsibility or corporate citizenship, organizations of all sizes are looking for ways to enhance their efforts to improve the safety and auditability of their supply chains and their suppliers.
For the food industry, it's imperative to have solid records to trace each product to its source. A recent study by the Food Marketing Institute shows 44 percent of consumers want to know that their food has been produced ethically, with designations such as fair trade and cage free. Approximately 43 percent want to know that the food was minimally processed, with designations such as organic, non-GMO and no preservatives.
Thus, today companies like Walmart use blockchain to keep track of its pork it sources from China and the blockchain records where each piece of meat came from, processed, stored and its sell-by-date. Other companies like Unilever, Nestle, and Tyson are also using blockchain for similar purposes.
Reason # 3 - "As a Digital Currency"
The most obvious use case for blockchain is as a digital currency through Bitcoin. At its core, Bitcoin looked to replace the use of traditional fiat currency like USD, Euro or Pounds, and by design enables a transfer of value, on a blockchain network.
While still seen as highly speculative and risky, digital currency, or cryptocurrency is becoming more talked about and well known to the wider public as time passes. Increasing numbers of companies are accepting it as a form of payment for goods and services every day. Although not all do at the present, there are many companies that now accept cryptocurrency including recognized brands such as Subway, Dell, Expedia, DISH, Overstock, Intuit and Microsoft.
Moreover, today blockchain has become well-suited for more effectively managing corporate working capital by lowering transaction costs between buyers and suppliers. For instance, a well proven one has been the story of an emerging off-road vehicle manufacturer, TOMCAR, out of Australia. Way before most started speculating on cryptocurrencies like Bitcoin, TOMCAR realized the value of blockchain by paying their suppliers overseas through Bitcoin. By cutting out the middle-man, in this case banks, they cut cost with lower international transaction fees.
Want a great piece to listen to, I highly recommend this podcast from the Wall Street called Can Blockchain Fix Our Food Chain?
In the meantime,
whether you're a
blockchain evangelist or
a technology naysayer,
what ways have you heard
about blockchain being
applied to a supply
Let us know your thoughts …