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3 Use Cases for Blockchain in the Supply Chain

by Kevin Guiliano, Analyst, Digital Supply Chain Management

January 31, 2019

As companies evolve in the digital era, so too are their supply chain challenges. In many cases this means digitization of outdated processes, and blockchain technology is a key driver to facilitate digital transformation in the supply chain. As an immutable, distributed ledger, blockchain offers unprecedented levels of security and helps forge more trusting relationships between peers within a given network.

Based on 2018 SAPinsider data, nearly 1 in 5 companies are currently using blockchain. The findings from this study indicate that more and more businesses are expected to adopt this transformational technology.

Here are some examples of use cases of blockchain technology by organizations in various industries.

Smart Contracts

Smart contracts are an effective vehicle in fostering simple and secure transactions between a business and its suppliers. While a smart contract serves the same purpose as a real contract, it really isn’t a contract at all. Think of a smart contract as code, which stores, verifies, and self-executes rules. The terms of the agreement between a business and its supplier are entered into the smart contract. Once both parties verify that the terms of the agreement have been met, the contract is executed. The supplier receives payment and the business receives its goods. The smart contract will be stored on the blockchain for all of time without the threat of being tampered with by either party. This peer-to-peer (P2P) network from which blockchain is built on serves to distribute the power among peers, instead of a central intermediary.   

Food Traceability

The food and beverage supply chain is well-positioned to leverage blockchain, and Walmart has cemented itself as an early adopter. The retail powerhouse plans to have its produce suppliers tracing their products using blockchain by the end of 2019. The initiative is in response to historic outbreaks of E. coli in romaine lettuce, as well as salmonella. With track-and-trace capabilities built on blockchain, Walmart will have strengthened its response capabilities when contaminated produce reaches the market. The customers will have a view into any given piece of produce from the farm to their dinner table. Walmart’s adoption of blockchain communicates a message of transparency to its customers; it shows that the company is moving beyond simply offering “everyday low prices.”

Drug Authentication

A major challenge faced by pharmaceutical companies is to reduce the number of counterfeit products entering the market. Companies that leverage anti-counterfeit labels on their goods provide customers with confirmation that the product is exactly what it claims to be. SAP has brought forth a new blockchain solution aimed at addressing the authentication issue plaguing the industry. A new public cloud system, called the Information Collaboration Hub for Life Sciences, has been designed to facilitate collaboration among supply chain trading partners, in turn enabling drug wholesalers to authenticate pharmaceutical shipments. The solution will help organizations systems to comply with the US Drug Supply Chain Security Act (DSCA).

Use cases in and outside of the supply chain are seemingly endless. A technology that was once most commonly associated with cryptocurrency has proven its true impact across industry landscapes. Blockchain is forging stronger supplier relationships, facilitating higher quality track-and-trace, and putting companies in a position to more safely serve their customers every day.

For more information on how to leverage blockchain technology in your organization, attend Financials 2019, March 19-21, in Las Vegas. Click here for more information and to register early to save $300.

If you have any questions or comments about this blog or blockchain, feel free to email the Digital Supply Chain Management team at gary.byrne@wispubs.comsahir.anand@wispubs.com and kevin.guiliano@wispubs.com. Follow us on Twitter: @SAPinsider, @sahiranand.

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