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The application of blockchain is well known in financial services, but lesser known is the technology’s potential in reducing the cost of peer-to-peer data and resource transfer, removing the need for third parties and middlemen across a variety of industries.
In the logistics industry, for example, blockchain has the potential to completely revolutionise supply chains, by radically simplifying and accelerating operations for manufacturers, fleet managers, brokers and shippers across a business network.
To illustrate the optimised information flow, let us use an example of sending a shipment of tulips from Holland to Singapore. This shipment will pass through multiple parties in the business network, across various modes of transportation before reaching its destination.
It starts at a Dutch farm where a truck will pick up the tulips and transport them to the dock. Because all members in the business network can view all the transactions in this shipment process without time-consuming reconciliation, the trucking company could be paid immediately once the ledger has been updated to indicate that the shipment has arrived safely at the dock.
The flowers are then loaded onto a cargo ship bound for Singapore. As tulips require cold temperature storage, the conditions of carriage may include penalties should the temperature of the flowers, which can be monitored using sensors, exceed certain thresholds.
If the cold storage facilities were to break down en route, penalties and conditions could be automatically levied and insurance companies notified. The sensor readings are posted onto the ledger, so all parties are kept abreast of the condition of the flowers.
As seen from this example, blockchain can track and trace the chain of custody between different modes of transport in a supply chain. Because everyone in the supply chain can view and trust the transactions posted, blockchain can reduce the time required for reconciliation and enable faster processes.
Using blockchain for food safety
Food safety is becoming a crucial issue today. Every year, one in 10 people fall ill globally and around 420,000 die as a result of contaminated food, according to global estimates of foodborne diseases from the World Health Organisation. Retailers aim to use blockchain technology to provide customers with more information about their products, improve traceability of their food supply and gain consumer confidence in their stores.
To that end, IBM and global retail giant Walmart have collaborated to develop a distributed, transparent supply chain tracker. The tracker allows users to track shipments of steak, medicine and other foods from origin to Walmart store. Blockchain, along with sensors, allows the retailer to track products quickly, efficiently, and in a trusted way.
Read more about blockchain in Asia-Pacific
- Taiwanese e-commerce company OwlTing has integrated blockchain technology into its supply chain infrastructure to improve food safety for consumers.
- Blockchain applications are upending traditional industries, with startup activity expected to ramp up in years to come.
- Although blockchain is no silver bullet, experts say Australian organisations should embrace and invest in the technology.
- Singapore fintech startup Invictus is tapping IBM’s blockchain technology and Bluemix cloud services to provide small companies with financing options from banks and other financial service providers.
Take papayas, for example. By providing a complete view of the entire ecosystem of papaya suppliers, Walmart would be able to quickly identify the source of contaminated fruits using trusted entries in the ledger. The affected batches of fruits could be isolated quickly, reducing further illness, lost revenue and wasted product. By authenticating food origins, consumers are also assured of the quality of the food they are buying.
While blockchain may appear complex and is perceived to be primarily in the financial technology (fintech) domain, every business needs to understand the benefits, challenges and use cases of this potentially transformative technology.
As the examples highlighted above show, with a peer-to-peer network and distributed consensus for data and transactions, blockchain reduces the need for a trusted, central party. This can potentially disrupt any business that generates value and profit from the frictions associated with the transfer of value, or the sharing of data or communication between diverse entities.