Practical examples: Creating transparency through blockchain in procurement and supply chains
Already in the past we reported in our blogs about the blockchain technology for procurement and supply chain. Its greatest advantages are in the area of data security, protection against manipulation and transparency. The technology is currently still in an advanced development phase. In many areas of application, efficient use in practice is only at the beginning of its possibilities. Nevertheless, not only large companies are intensively concerned with the future potential of blockchain technology for purchasing and the supply chain. There are already several successful application examples. In the following we would like to introduce some concepts to you.
Creation of new „ecosystems“ through blockchain in the supply chain
The IT and consulting company IBM is currently pursuing several projects regarding blockchain implementation. The global open industry platforms have usually been developed in cooperation with one or two major players in the respective industry, in order to subsequently offer other companies participation in the blockchain network according to the join principle and thus further develop it in collaboration with all participants. Common to all systems is that the participants can connect, exchange and collaborate digitally via the network, worldwide and in real time. Conclusion here: Blockchain in purchasing and supply chain leads to a worldwide network for data exchange.
Blockchain in procurement and the supply chain for more sustainability and transparency
Together with Walmart, for example, IBM operates Food Trust. This is a blockchain platform for tracing food traded worldwide in networks with farmers, processors, manufacturers and retailers. Together with Maersk, the world’s largest shipping company, the TradeLens project is being implemented. This is a system for global container shipping that has been developed according to ecological criteria and in which more than 120 participants – other shipping companies, ports, logisticians, etc. – are involved by now. The first customs authorities are being onboarded. It is planned that in the medium term about half of all worldwide sea container transports will be covered by TradeLens. By using blockchain in the supply chain, transit times of individual deliveries can be reduced by up to 40 percent. Ford and Volkswagen are working on a system to increase efficiency, sustainability and transparency in the supply chain of minerals. The pioneer here is the heavy metal cobalt that is required to produce batteries. The blockchain platform makes it possible to trace the origin of the products and pays attention to sustainability criteria such as working conditions in the mines.
Optimization of procurement and supply chain activities and increase of consumer safety
Other companies and industries are also pursuing blockchain projects to optimize procurement and supply chain processes. For instance, the MediLedger project, a collaboration between the San Francisco-based technology company Chronicled and the US supply chain consultancy The LinkLab, is intended to significantly change the management of the pharmaceutical supply chain by enabling the digital inventory and traceability of drugs and their ingredients. The Aschheim-based company Wirecard is developing the prototype of a universally applicable supply chain platform. This blockchain technology is adaptable to different markets and the trade with many raw materials, such as coffee, oil or steel, in an integrated, decentralized database.
Blockchain in procurement as information source for investment decisions
But Blockchain technology also offers potential for purchasing beyond the use for tracing supply chains, because its use makes sense wherever transparency and traceability play a role.
Another example is the Blockchain for Aviation (BC4A) initiative launched by Lufthansa. The aim is to document all the components of an aircraft throughout their entire life cycle: Where does the part come from? When was it installed? How many flying hours has it had? In this way, valuable information can be collected and linked across companies: From the manufacturer to the airline to the maintenance and repair service provider, in order, for example, to make a better decision on repair or replacement in the event of a breakdown.
As you can see: Blockchain in purchasing and the supply chain has the potential for enormous transparency – especially regarding supply chains – and thus the pursuit of sustainability throughout all stages. This, coupled with the highest possible data security, makes blockchain technology the door opener to new possibilities and thus has a great influence on the future design of purchasing and supply chain processes. We follow the further exciting development for you and will be happy to keep you up to date.
Gregor van Ackeren
Managing Director, ADCONIA GmbH (Oberhausen, Germany)
Consultant, ADCONIA GmbH (Oberhausen, Germany)