Some days ago, Spanish authorities struggling to control the COVID-19 outbreak found out that many of the Corona-tests they had bought were unacceptably flawed. All fingers pointed to a supplier who had not been licensed by the government.
The Corona-crisis has in fact been said to threaten with supply-chain disruptions that could endanger both businesses and the livelihoods of millions of people.
A number of aspects have been identified as probable to be hit by a supply-chain disruption. In a recent report, Gartner identified materials, labour, sourcing, logistics and consumer related challenges that could stem from the present situation.
In relation to materials, hundreds of reports have pointed out how COVID-19-impacted areas of the world have affected the supply chain when some essential component or finished good is produced there.
Quarantine or illness-affected workers in both service and industry mean that several products may not be produced in sufficient quantity – or at all.
As travel bans now cover most of the world – notably China has suspended most inbound travel in fear of re-igniting the pandemic within its borders – the ability for businesses to source, qualify and certify supply partners can become limited.
On the consumer side, several developments affect the supply chain. Habits change, as the perception of what is essential on a crisis -such as hand-sanitizers- change buying patterns. Panic-buying - like the pervasive craze for toilet paper – may be temporary but they do create spikes in demand that are not easily met by the current supply structures. Plus, the lockdown imposed on vast parts of the world population are creating an unprecedent demand for online shopping.
Lastly, the established logistics hubs and supply networks may experience limitations in capacity and availability. Necessary supplies may be available but they may be blocked somewhere along the route if no alternatives ones are identified.
As the Spanish Corona-test fiasco illustrates, supply chain problems are direst when it comes to securing critical medical items.
Blockchain hype has in recent years tagged this technology as the answer to everything, so, one may be justifiably suspicious of so many proposed wonder-cures based on it. That said, supply chain applications are one of the most successful use cases for blockchains. And while their implementation may not reach in time to help us overcome the present crisis, they could certainly prove useful for the next.
There are several challenges which may be addressed by blockchain applications in the supply chain – particularly for medical supplies. Some of them are related to trust issues - an area in which blockchain fares pretty well.
A blockchain is in essence a decentralized database, with no single peer being able to individually alter the information stored on it. This makes blockchains wonderfully tamper-resistant and resilient to loss of data. And the information stored in it becomes highly reliable not just because fumbling with it becomes nearly impossible – but also on grounds of the incentives that all participants have to store truthful facts – and challenge those who are not.
If you couple this with the fact that every participant and their activities on the network can be unequivocally identified you have a potentially powerful resource which all participants of a supply chain can tap together. Supply chains are comprised of multiple stakeholders which normally have to rely on the information provided by the others in the sequence. This works fine when all parties in extended supply chains are known and trusted because they can be relied upon to provide a single, real-time version of the truth.
But in present times of uncertainty when disruptions may arise all along the chain the need might arise to find alternative partners. Pooling supply chain information on a decentralized and cryptographically secured way may ease decisions such as buying, routing, certifying or paying among parties that do not know each other previously.
Take for example supplier credibility issues. On emergency situations a particular supplier may become unexpectedly unavailable. This is especially problematic in a just-in-time supply architecture where little or no reserves of a critical item may be in place. An alternative credible supplier must be identified with no delay, who can deliver with the right quality, volume and in time.
In critical times financial demands of suppliers become more stringent – some even requiring upfront payments and struggling to prioritize credible purchase requests.
Further, if customs certifications are not validated swiftly – critical supplies may linger in a given location for too long before they are cleared to proceed to destination.
Identifying and tracking a safe transport is a further credibility issue that may be tackled by blockchain applications. If a route or a means of transport proves unavailable, blockchain based solutions may help identify new ones. And once en-route, they may help in securing that all necessary transport conditions- like humidity or temperature - are adequately met. It must be noted, however, that blockchains do not provide per se this information to the network participants. Any information on external facts of the physical world like product specifications, place of provenance, quality, etc. must be fed into the blockchain through trusted entry points known as “oracles”.
Perhaps one of the most renowned supply chain blockchain project is the London based Provenance. Their white paper claims that their product is able to “secure traceability of certifications and other salient information in supply chains [and] enables every physical product to come with a digital ‘passport’ that proves authenticity (Is this product what it claims to be?) and origin (Where does this product come from?), creating an auditable record of the journey behind all physical products”
IT giants such as IBM are investing on blockchain based supply chain solutions, ranging from container logistics, digital identity to help streamline procurement processes, sourcing of materials, counterfeit prevention and visibility – so participants in a supply chain can respond more promptly to spikes in demand and sudden disruptions.
Some projects emphasize on securing trustworthy data in complex supply chains to prevent fraud, and increase the interoperability of existing data platforms. Origin Trail, for example, is meant to “... increase the integrity and veracity of supply chain data.”
Other initiatives yet, focus on aiding different players in the supply chain secure financing. ZERO1 CAPITAL, for instance, is tailored for small and medium enterprises. They aim at helping them get early stage supply chain financing. This Spanish project’s goal is that the funded SME’s evolve together with the production cycle, adjusting the price as milestones are achieved and thus allowing suppliers to leverage the credit worthiness of their clients to lower the borrowing cost.
These are but examples of one of the most mature areas for blockchain application deployment. In general, we expect enormous growth here and - when the next global crisis strikes – to see blockchain-based solutions bring relief to millions of people worldwide who simply cannot afford not getting life-saving supplies on time.