Using Blockchain to Drive Supply Chain Transparency and Innovation (2024)

') $(accordionID + '-controls .daccord-expandcollapse li').eq(1).hide(); $(accordionID + '-controls .daccord-expandcollapse li').on('click',function () { if ( $(this).index() == 0) { //expand $(accordionID + '-controls .daccord-expandcollapse li').eq(0).hide(); $(accordionID + '-controls .daccord-expandcollapse li').eq(1).show(); $(accordionID + ' .daccord-collapse').slideDown(daccordSpeed); $(accordionID +' .daccord-header').addClass('daccord-header-icon'); } if ( $(this).index() == 1) { //collapse $(accordionID + '-controls .daccord-expandcollapse li').eq(1).hide(); $(accordionID + '-controls .daccord-expandcollapse li').eq(0).show(); $(accordionID + ' .daccord-collapse').slideUp(daccordSpeed); $(accordionID +' .daccord-header').removeClass('daccord-header-icon'); } }); } //if a valid var from url exists override open item setting. var daccordUrlVar = $.getUrlVar('cor-1'); if ($.fn.daccordIsInt(daccordUrlVar)) { var urlInt = parseInt(daccordUrlVar); daccordUrlVar = urlInt; properties.openItem = daccordUrlVar; } //Build item object from AEM Vars var daccordItems = []; //Item 1 daccordItems[0] = { itemTitle: "Reduced risk", itemText: "

The issue: Most supply chain risks fit within one of four categories—sourcing, transport, facility, or distribution. Each potential risk arises at a different step in the traditional source, make, and deliver process.

1. Sourcing risks occur upstream when a supplier suddenly fails to provide goods or services on time.
2. Transport risks occur with a disruption to a company’s inbound or outbound logistics.
3. Facility risks coincide with interruptions in warehousing and manufacturing operations.
4. Finally, distribution risks manifest downstream when demand spikes or flatlines.

Opportunity for blockchain: Access to reliable data can help mitigate all these risks thanks to the timely identification of issues and potential alternatives. Yet, accessible, complete, and accurate data is not always easy to come by in a supply chain. The sheer number of parties involved, such as suppliers, manufacturers, distributors, retailers, and logistics providers, complicates matters. Moreover, since parties in a supply chain typically store data in silos, there is lack of data sharing among them, and the accuracy of that data can vary considerably. Blockchain helps address all these issues by creating a trusted, shared, and decentralized ledger that eliminates silos and guarantees all parties access to that ledger thanks to tamper-proof records that help ensure the data’s trustworthiness.

Consider this example. Blockchain, integrated with AI and data shared across cellular networks via Internet of Things (IoT) devices, can help companies monitor and expedite the identification of bottlenecks in the supply chain, thereby mitigating transport risks. This, in turn, can allow businesses to better anticipate the possibility and extent of delays.

Within the different facilities of a business, participants can reduce specific facility risks by leveraging satellites, IoT devices, and cellular networks connected to the blockchain. This allows them to monitor and provide real-time alerts about inventory levels and any disruptions at key inbound or outbound handoff points to upstream and downstream partners. Blockchain captures the collected data points as immutable records, which managers can access to trace and identify points of disruption and plan any necessary product reroutes. Blockchain also helps mitigate potential insurance disputes between parties by embedding insurance policies within smart contracts that will automatically execute their terms when triggered by a given event (e.g., weather-related disasters, cybersecurity attacks).

Finally, downstream, blockchain can help mitigate distribution risk. It allows organizations to build digital inventories that are accurate and immutable by implementing AI to obtain real-time insights into demand shifts, patterns, and potential disruptions. All that helps companies make informed planning and inventory management decisions and more effectively manage the flow of goods down to the last mile.

Real-life example: Multiple entities within the Mitsubishi Group decided to explore the value of blockchain for various stages of their supply chain. As the world’s largest producer of methacrylates (a basis for the polymers used in the manufacture of a wide range of medical equipment, from intravenous tubes to heart valves), Mitsubishi Chemical Group conducted a pilot project. Its goal? To enhance sourcing capabilities and provide both the enterprise and consumers with trustworthy data on the true origins of all its products.⁴ The pilot provided the group with the ability to trace the full chain of custody and distinguish between the origins of the material (conventional versus recycled materials) through the use of colorized tokens (red versus green). As a result, Mitsubishi was able to assemble the necessary evidence in cases where the materials received did not meet contractual standards.⁵

Meanwhile, Mitsubishi Logistics also implemented its ML Chain platform. It allows the entity to sustainably manage facility, transportation, and distribution risks for its outsourced pharmaceutical shipments. It also provides clients with quality assurance guarantees that products are stored under proper conditions (e.g., proper temperatures) during transport from pharmaceutical factories and logistics hubs to wholesalers. The platform’s distributed ledger technology helps ensure that data is tamper-proof and easily accessible to Mitsubishi Logistics’ client base so all parties can flag potential issues at their source of origin along the blockchain.⁶

", itemImage: "${item-1-image}", itemImageRight: "${item-1-image-right}", itemMoreText: "${item-1-read-more-text}", itemMoreURL: "${item-1-read-more-url}", itemVideoURL: "${item-1-video-url}", itemInfographicUrl: "${item-1-infographic-url}" }; //Item 2 daccordItems[1] = { itemOpen: "${item-2-open}", itemTitle: "Enhanced visibility", itemText: "

The issue: Many companies struggle with a lack of end-to-end visibility and transparency in their supply chains.⁷ Despite the growing ESG expectations of consumers and governments alike, many organizations are still unable to provide irrefutable information regarding provenance and chain of custody. That’s especially true of large organizations with complex, multi-tiered supply chains. It can be particularly difficult for anchor companies (i.e., large global businesses with a lot of market power and a high-profile brand) at the downstream end of a supply chain to ensure that small businesses (i.e., companies that are more than 10 tiers upstream) are treated fairly and ethically.

Opportunity for blockchain: By implementing a blockchain-based supply chain, businesses can effectively digitize physical assets and create a decentralized, immutable record of all transactions across the end-to-end value stream.⁸ Paired with IoT devices and radio-frequency identification (RFID) tags, participants can monitor the real-time conditions and movements of both perishable (e.g., vaccines and agricultural products) and non-perishable goods (e.g., gold and diamonds) on the blockchain thereby making it possible to track a product from origin to delivery … all the way to consumption. The blockchain creates an irrefutable product history that anchor companies can use to enforce ethical and sustainable business practices upstream more effectively. Enhanced supply chain visibility can be particularly effective in industries involving materials prone to unethical sourcing such as “conflict diamonds.” The mining of these rare stones often occurs in countries with corrupt or weak regimes, where there is a significant risk of human rights abuses, including forced labor and child labor.

In the case of diamonds, it is, therefore, important for consumers to be able to trace the origin of their purchase to ensure that it has been ethically sourced. Another case in point is lithium batteries. Given their huge global demand, they are prone to counterfeiting. But thanks to blockchain, manufacturers can counter that by assigning barcodes to products and by generating unique tokens (i.e., digital twins). Each token contains cryptographic seals that denote the certification, originator, registry, and other data that prove the authenticity of each battery.⁹

Real-life example: De Beers, one of the largest diamond producers in the world, has implemented a blockchain-based tracking system called Tracr. Tracr allows De Beers to track diamonds from the point where they are mined, through the cutting and polishing process, and ultimately to the end consumer. This technology provides tamper-proof source assurance at scale, encourages consumers’ confidence in the ethical sourcing of their diamonds, and helps to combat the trade in conflict diamonds.¹⁰

", itemImage: "${item-2-image}", itemImageRight: "${item-2-image-right}", itemMoreText: "${item-2-read-more-text}", itemMoreURL: "${item-2-read-more-url}", itemVideoURL: "${item-2-video-url}", itemInfographicUrl: "${item-2-infographic-url}" } //Item 3 daccordItems[2] = { itemOpen: "${item-3-open}", itemTitle: "Improved trust", itemText: "

The issue: In a large, global supply chain that encompasses many parties, anchor companies may find it difficult to trust their upstream counterparts. Visibility and trust recede rapidly for most companies, even after the second tier of relationships. Such lack of trust has been warranted in the past, given counterfeit and gray market trade, the mistreatment of workers, and inconsistencies in sustainability practices among partners in the supply chain.¹¹

Opportunity for blockchain:By recording all supply chain transactions on a shared and immutable ledger, blockchain provides a level of trust previously impossible. Importantly, it offers this level of trust to all participants (big and small) in the network. It does so by giving them access to the same information passed along the supply chain (thereby reducing fraud), by potentially minimizing communication or data transfer errors, by allowing businesses to maintain oversight on outsourced manufacturing contracts, and, ultimately, by saving businesses time previously spent validating data.¹² Finally, it is worth noting that smart contracts provide yet another mechanism for enhancing trust. By automatically executing a verifiable code that implements contract terms and conditions, smart contracts guarantee that participants in the supply chain adhere to the terms defined in their contract. That helps radically reduce the risk of incorrect or inconsistent contract execution.¹³

Real-life example: FedEx developed a prototype system to enable real-time tracking and monitoring of shipments. The blockchain-based system provides a secure, tamper-proof, and decentralized database that records every step of the shipment process—from the point of origin to the final delivery destination. The system uses smart contracts to automate the transfer of ownership/possession of goods between different parties, such as the shipper, carrier, and receiver, and to ensure that all parties are aware of the current status and whereabouts of the shipment. That, in effect, eliminates the need for participants to trust each other. Moreover, this system helps enhance the customer experience and reduces the likelihood of disputes among various participants. In the event a dispute should arise, the smart contract can automatically trigger a resolution process, such as the return of the shipment to the original shipper.¹⁴

", itemImage: "${item-3-image}", itemImageRight: "${item-3-image-right}", itemMoreText: "${item-3-read-more-text}", itemMoreURL: "${item-3-read-more-url}", itemVideoURL: "${item-3-video-url}", itemInfographicUrl: "${item-3-infographic-url}" }; //Item 4 daccordItems[3] = { itemOpen: "${item-4-open}", itemTitle: "${item-4-title}", itemText: "${item-4-text}", itemImage: "${item-4-image}", itemImageRight: "${item-4-image-right}", itemMoreText: "${item-4-read-more-text}", itemMoreURL: "${item-4-read-more-url}", itemVideoURL: "${item-4-video-url}", itemInfographicUrl: "${item-4-infographic-url}" }; //Item 5 daccordItems[4] = { itemOpen: "${item-5-open}", itemTitle: "${item-5-title}", itemText: "${item-5-text}", itemImage: "${item-5-image}", itemImageRight: "${item-5-image-right}", itemMoreText: "${item-5-read-more-text}", itemMoreURL: "${item-5-read-more-url}", itemVideoURL: "${item-5-video-url}", itemInfographicUrl: "${item-5-infographic-url}" }; //Item 6 daccordItems[5] = { itemOpen: "${item-6-open}", itemTitle: "${item-6-title}", itemText: "${item-6-text}", itemImage: "${item-6-image}", itemImageRight: "${item-6-image-right}", itemMoreText: "${item-6-read-more-text}", itemMoreURL: "${item-6-read-more-url}", itemVideoURL: "${item-6-video-url}", itemInfographicUrl: "${item-6-infographic-url}" }; 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css += accordionID + ' .daccord-header-icon a { background-color: ' + properties.titlebarActiveBackgroundColor + ' }'; css += accordionID + ' .daccord-header-open a { background-color: ' + properties.titlebarActiveBackgroundColor + ' }'; css += accordionID + ' .daccord-header .daccord-header-bar-icon:after { color: ' + properties.titlebarBackgroundColor + ' }'; css += accordionID + ' .daccord-header-icon .daccord-header-bar-icon:after { color: ' + properties.titlebarActiveBackgroundColor + ' }'; css += accordionID + ' .daccord-header-open .daccord-header-bar-icon:after { color: ' + properties.titlebarActiveBackgroundColor + ' }'; $('head').append('

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