In nearly every industry today, organizations are challenged with finding efficient, secure methods to manage and share data related to transactions, contracts, assets and more. From finance and real estate to healthcare and retail, information silos and disparate databases create operational inefficiencies and make true collaboration between business parties difficult to achieve. However, a new technology has emerged that allows companies to break down these data silos and digitally connect multiple systems, partners and customers: blockchain.
Introduced in 2009 by Bitcoin inventor and pioneer, Satoshi Nakamoto, blockchain was originally developed to track cryptocurrency exchanges. A permanent, connected, peer-to-peer ledger, blockchain digitizes transactions by saving each exchange in a series of cryptographic blocks, from which the technology gets its name. No single party can alter any records, and any change requires consensus from all those in the network. The resulting ledger is immutable, providing complete data transparency and building trust for all members of the blockchain network.
Growing Blockchain Adoption
With its origins in cryptocurrency, many organizations in finance and banking have naturally gravitated towards investing in the technology. However, blockchain carries the potential for a wide variety of applications beyond financial transactions. Its ability to provide real-time data visibility and transparency while keeping private information secure can help companies across industries improve operational efficiency, establish trust and make critical business decisions.
Healthcare practices, for instance, are exploring blockchain as a solution for the secure management of patient data. Hospitals, health systems, and insurance providers can use blockchain to record clinical information, share medical records, and even manage patient consent. The entertainment industry has found applications for the technology as well, employing it to prevent piracy. Movie studios and music labels can leverage blockchain to monitor owned content distribution, rights management, sales and licensing deals. And in real estate, blockchain can be used to manage contracts, property records and monetary transactions to streamline the home buying process.
In fact, a 2018 Deloitte survey of more than 1,000 global executives revealed not only growing interest in blockchain’s potential, but also rising investment in its practical applications:
- 74% of respondents stated that their companies recognize a “compelling business case” for Blockchain.
- 34% reported already having a blockchain system in production.
- 41% expect to deploy a blockchain solution within the next 12 months.
With companies across industries managing the increasingly complex networks involving the production, transportation and distribution of goods, it’s no surprise that 54% of survey respondents are exploring blockchain’s use cases for the supply chain.
Data Transparency in the Supply Chain
With today’s global supply chains spanning multiple manufacturing sites, suppliers, distribution centers and retail channels, blockchain is poised to transform supply chain management for companies of all sizes. As products pass through each point in this complicated network, information is stored in disparate databases, recorded on spreadsheets or filed away as paper documents. This disconnect between parties results in limited visibility into operations, creating inefficiencies and imbalances upstream and downstream.
Without end-to-end visibility across their supply chains, companies lack the data needed to make critical decisions when it comes to demand forecasting, manufacturing planning, and inventory replenishment. Businesses have to rely on a reactive approach, incurring losses due to inaccurate inventory levels, poor turnover, increased markdowns and out-of-stock goods. Though some companies have implemented enterprise resource planning (ERP) systems as a solution, the majority of these applications only provide warehouse-level planning and do not factor in store-level demand. Instead, they need a solution that provides real-time data transparency so that they can make proactive business decisions and drive growth.
Blockchain offers a way to seamlessly share data between each party in the supply chain through an end-to-end ledger of goods movement from source to shelf. All transaction records are digitized, centralized and accessible, so that every member of the network can view in real time what has been produced, distributed and sold. Companies can then boost profitability with proactive and accurate forecasting and planning based on true demand.
Accountability Between Business Parties
Further, blockchain can drive accountability between all parties connected through the network. When records are fragmented, each point of the supply chain must expend time and resources to validate activities upstream and downstream. The lack of collaboration can lead to distrust between parties, particularly when it comes to financial transactions and contract fulfillments.
One method companies can use to overcome mistrust is through the use of smart contracts. These contracts are self-executing, digital agreements between parties that are stored, replicated and supervised on the blockchain network. Unlike traditional contract formats, the conditions of a smart contract are available to everyone in the network, and no changes or addendums can be made without approval by all those involved. This ensures the contract is protected from breaches and that all parties are accountable for contract fulfillment.
In the supply chain, for example, a smart contract can be used to streamline the transactions between a trucking company and a retailer. With all conditions recorded in a smart contract, the retailer can ensure the right goods are delivered at the right time, and the carrier receives correct payment as soon as shipment receipt is confirmed. The collaboration drives efficiency and trust between each level of the supply chain.
Traceability and Consumer Trust
Blockchain’s data transparency not only enables collaboration between business parties, but also cultivates trust between businesses and consumers. The food and beverage industry in particular faces stringent compliance regulations that cover everything from proper growing, processing, packaging, transportation and storage of food—all designed to prevent foodborne illness and strengthen the increasingly global food system. But with extensive supply chains spanning from raw ingredient suppliers and manufacturers to warehouses and retailers, ensuring food quality and safety can be a difficult task.
Failure to comply with food safety regulations can have a disastrous effect on any business, including costly fines and damaging recalls. Every quarter, the FDA recalls almost 100 million units of food, and mislabeled products are one of the leading causes. These often highly-publicized recalls are not only expensive, but can also cause irreparable damage to a businesses’ reputation. Undeclared ingredients and allergens put buyers’ health at risk and lead them to question the reliability of a product and brand.
Using blockchain technology, businesses can guarantee product integrity and build a trusted brand reputation. Accessible to all members of the network, blockchain can create an irrefutable record of a product’s entire lifecycle—from raw ingredients to the retail shelf. This data can be used to trace critical information about an item’s source, properties and movement so that there is no doubt about where it came from, what it contains or how it was handled. Therefore, when a label states an item is organic, produced locally, or dairy free, customers will be confident in their purchasing decisions and build loyalty with the brand.
In the case of an unavoidable recall, businesses can streamline the process to minimize damages and waste. Using data recorded on the Blockchain, a safety or quality problem can be traced back to its source, whether it be caused by a supplier, manufacturer or in packaging. Once the problem has been pinpointed and rectified, companies can perform a targeted recall only on the affected products. This approach not only protects consumers from food safety concerns, but also safeguards brands from the damages a widespread recall causes to profitability and reputation.
The Future of Blockchain Solutions
As revolutionary new use cases and developments in the technology emerge, more and more businesses have launched blockchain initiatives. These are often household names like Walmart, FedEx, and Amazon. Because of this big business trend, small-to-mid size companies tend to assume that blockchain technology involves significant investments in implementation and infrastructure—a complex project they lack the resources to take on.
However, blockchain is available to companies of any size through a software-as-a-service (SaaS) model. These cost-effective solutions offer accelerated deployment times and do not require investment in expensive infrastructure. In fact, the right technology provider can have a SaaS-enabled blockchain solution connected and functional within just 90 days. This model can allow users to access and share critical data through any device, at any time, and can be easily scaled as the business grows.
In today’s marketplace where data management and security is a chief concern, blockchain can offer companies the competitive edge they need to make informed business decisions, improve efficiency and drive growth. With real-time access to shared, immutable data records across the blockchain network, companies in any industry can reap the benefits of transparency, accountability and trust between businesses, partners and customers.