Imagine a world without middlemen. Where the parties in a financial transaction could deal with each other directly, and trust was automatic, even if they were total strangers. Where a complete, up-to-date and tamper-proof record of transactions or other data could be shared and viewed simultaneously by the parties concerned.
This is the promise of blockchain, which seems set not only to revolutionise business but to transform lives. It could mean, for example, a fairer deal for the one sixth of the world’s population who have no documented proof that they even exist. Or better protection from counterfeit drugs estimated to be killing a million people each year.
But why should blockchain matter to you and your industry?
We can’t be sure of its future, although I do know it’s rapidly making its way into my sector – logistics – and may even become mainstream within the next 10 years. If we play it right, blockchain could have a hugely positive impact on supply chains – and to take full advantage of its opportunities we must prepare for it now.
Is blockchain reality or wishful thinking?
Blockchain is perhaps best known as the technology that allows cryptocurrency to be transferred safely between users with no need for verification by a third party, such as a bank. The same basic principles can be adapted to handling any data with an intrinsic value, including contracts, legal documents, intellectual property and personal details.
Here are just a few examples illustrating that scope and showing how blockchain is already making a difference:
- The UN-affiliated organisation ID2020 aims to give around a billion ‘invisible’ individuals a digital ID, which will improve their chances of accessing support and benefiting fully from society
- The Estonian government offers ‘e-resident’ digital identity, along with a system that securely manages health records and other data – making them visible only to the individual citizen and those to whom he or she gives access
- DHLand Accenture have developed a pharmaceutical track-and-trace prototype to simulate verification of a transported item’s identity at each stage in the supply chain, so the end user can be totally confident of its origin and authenticity.
Another organisation with an interest in blockchain’s potential is aerospace giant Airbus. Its research has highlighted several business challenges which blockchain can help to answer. For instance, with air traffic predicted to double over the next 20 years, and a need to train around half a million new pilots, will the current time-consuming process for checking pilot qualifications and experience be able to cope? Airbus has trialed a blockchain system which – if adopted universally – could give authorised users from all airlines the same instant access to verified data on any pilot.
In the retail sector, a key driver has been the need to increase supply chain transparency, and especially to assure customers that goods have been ethically and sustainably sourced. Global startup Everledger specialises in using blockchain and other technologies to confirm the provenance of such valuable assets as precious stones, wines and artworks. Even a diamond can be inscribed – by laser – with a unique certificate number which links it to a digital record containing comprehensive details of its identifying features.
Can you see beyond the hype?
Some people are getting carried away by the excitement and hype surrounding blockchain. If you believe the news, there is nothing it can’t do, but I think we should be realistic as well as imaginative in our approach. Blockchain technology is still relatively young and many aspects of its concept and application will have to be considered, tried, tested and improved before it expands further into the business world.
Bear in mind that blockchain brings challenges as well as solutions – and some of them are currently very far from being overcome.
For example, how can we achieve a tamper-proof link between a physical object and its digital identifier? This is a key issue for logistics, where it ultimately means a break in the chain. Aside from such practical issues, making use of blockchain technology will also require a significant cultural shift. For instance, businesses will have to override their instinct to keep all data strictly within their own walls, and instead be prepared to share it – albeit securely – within a network. And what will become of our relationships with the banks and other institutions on which transactions have depended until now? While there is a threat of disintermediation, it is likely that these institutions will still be necessary, although their roles and business models will need to be redefined.
Are you ready for the revolution?
To succeed in this new world, logistics and supply chain businesses need to be working today to create a culture of collaboration. As well as building up your own blockchain knowledge and capabilities, you should be engaging with your partners and stakeholders.
Make sure that they, too, know how to identify opportunities across their operating models for gaining value through blockchain. Empower them with the time, tools and resources that will help them become effective contributors to a blockchain project. Think of the business landscape as a complete ecosystem, in which your interactions with blockchain consortiums, technology players, implementation partners and associations will affect everyone’s results – including your own.
