Recent Private and Public Sector Efforts Moving Blockchain-Based Supply Chain Initiatives Forward

Photo by Héctor J. Rivas on Unsplash

Have you heard of blockchain fatigue? This is when continued efforts to implement blockchain technology have not hit traction. Gartner has predicted that by 2023, 90 percent of blockchain-based supply chain initiatives will be impacted by blockchain fatigue and most have not moved out of the pilot phase due to “a combination of technology immaturity, lack of standards, overly ambitious scope and a misunderstanding of how blockchain could, or should, actually help the supply chain.” In addition, Forrester notes that at times the technology and implementation can be excessive for a supply chain application.

On the other hand a recent Deloitte survey revealed:

  • 83% of respondents note their organizations see compelling use cases for blockchain
  • 53% reported that blockchain technology has become a critical priority for their organization this year (10% increase from last year)
  • 40% are willing to invest US $5M or more in new blockchain initiatives over the next 12 months

What is the current state of supply chain blockchain adoption? Here are noted examples of recently announced public and private sector efforts that are moving initiatives forward.

Public Sector  

I had the opportunity to hear Senator Ben Kieckhefer speak last week at the Nevada Economic Development Conference about the state’s leading efforts in enabling distributed ledger technology adoption. The Senator spoke on why government legislation is key for the advancement of blockchain technology and innovation. In 2017, SB (Senate Bill) 398 provided a foundation that allows Nevada to be a safe place for blockchain companies to operate (Matthew Digesti, also on panel).

Four additional Senate Bills have been recently passed in Nevada that aid in removing barriers for blockchain adoption:

  • SB 162 keeps the existing definition of ‘blockchain’ intact while adding a separate and distinct definition for ‘public blockchain,’ “signaling to the blockchain ecosystem that Nevada understands and embraces blockchain technology in its different forms” (Digesti). It also permits government entities throughout the state to accept records recorded on a blockchain as they would other forms of digital documents and reaffirms that individuals do not relinquish ownership of any information they choose to secure using a blockchain (Putney, ETHNews)
  • SB 163 allows businesses to store their records and permits required by the secretary of state using blockchain technology
  • SB 164 defines cryptocurrencies as intangible personal property
  • SB 161, modeled after Arizona legislation, provides businesses testing new uses of the distributed-ledger technology with temporary exemption from certain financial regulations (Wood, Statescoop)

Other state governments are making efforts to encourage adoption of the technology. Examples include Colorado hiring a ‘blockchain solution architect’ and considering using the technology for managing its agricultural supply chain while Illinois has been studying possible use-cases, such as lands records management (Statescoop).

Private Sector

Looking at the private sector, IBM and Chainyard recently announced a new blockchain network designed to improve supplier qualification, validation, onboarding and life cycle information management called Trust Your Supplier. Anheuser-Busch InBev, GlaxoSmithKline, Lenovo, Nokia, Schneider Electric and Vodafone are founding participants alongside IBM. According to the press release, “Trust Your Supplier creates a digital passport for supplier identity on the blockchain network that allows suppliers to share information with any permissioned buyer on the network. Blockchain ensures a permissioned based data sharing network. This should help reduce the time and cost associated with qualifying, validating and managing new suppliers while creating new business opportunities among suppliers and buyers. Third-party validators, such as Dun & Bradstreet, Ecovadis and RapidRatings provide outside verification or audit capabilities directly on the network.”

CIO Dive reports that Bumble Bee is taking the ability to trace products through the supply chain to the next level by utilizing blockchain technology where data in a distributed ledger is encrypted. “It’s tamper-proof, yet shareable among all parties in the supply chain…If you think about all of the entities involved in the supply chain, from the fisher all the way to the finished good processor, [Bumble Bee] doesn’t own any of those processes. They are the ones putting their information in the blockchain.”

A new pharmaceutical supply chain-based initiative involving Merck, Walmart, IBM and KPMG will evaluate blockchain technology for “protecting drug product integrity” and developing “an electronic, interoperable system to identify and trace certain prescription drugs in the U.S.”

Nestlé, through its collaboration with OpenSC, is one of the first major food and beverage companies to pilot open blockchain technology. OpenSC is a platform that “will give anyone, anywhere access to independently verifiable sustainability and supply chain data.” Initially the pilot program will trace milk from New Zealand farms to Nestlé factories in the Middle East. Since 2017, Nestlé has been piloting blockchain technology, most notably with IBM Food Trust.

In the textile industry, Brazilian multinational clothing brand Instituto C&A is partnering with Instituto Alinha to adopt blockchain technology in its supply chain to track garments through the entire supply chain. The cotton industry in Haiti is using blockchain technology to ensure “the origin of organic material by monitoring all stages of the process.”

For additional reading on the current state of supply chain blockchain projects, Justin Caldwell of Bitcoin Market Journal has published an interesting top 10 list of projects that have been rated and reviewed. The description of the project is provided, along with the year established, notable partnerships, social following numbers, recent update dates, and score.

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