More and more businesses are moving beyond the hype and using blockchain to transform their supply chains.
Blockchain is one of the transformational technologies which has hit the scene in recent years, and yet it is among the least understood of all the technologies reshaping the world of commerce. For example, one global survey found that 80% of people don’t understand what blockchain is – and those who do have some idea often conflate blockchain with bitcoin.1
But beyond the hype, a growing number of businesses are using blockchain to transform their supply chains – and in doing so are reinventing some of the world’s oldest industries.
Take the winemaking industry, which predates the written record. For as long as wine has been made, it has been watered down and weakened, counterfeited through chemical concoctions, bootlegged, faked and forged.
In 2018, the first case of blockchain certified Bianco Falanghina wine hit the market. Supported by a blockchain platform developed by EY and startup EZ Lab, each wine bottle boasts a smart tag. Importers, wholesalers, distributors and consumers can track the entire production process from grape to glass: harvest date, fermentation, lot production, bottling date, water consumption and more.
Or take the agriculture industry. EY and the Commonwealth Bank of Australia have been working together to test blockchain-based platforms to help agribusinesses share high-value assets between farms. This idea of "fractional ownership“ is particularly relevant in an industry where equipment is expensive and only used seasonally. In one prototype, we imagined three farmers co-owning a crop sprayer fitted with Internet of Things sensors. By employing blockchain technology, the asset could be kk“self-managednn“ – automatically unlocking when a payment is transacted for use.
Another example is the maritime industry, which still bases its decision-making on working practices and business models from the seventeenth century. EY and enterprise blockchain company Guardtime recently worked with Microsoft to develop a platform that digitizes marine insurance contracts. The blockchain technology, developed in consultation with insurance brokers and the world’s largest shipping company Maersk, allows insurance companies to immediately update information online or see where a ship is anywhere in the world at any point in time.
Blockchain has the potential to automate trust through a “single source of truth” for all partners in a supply chain partner ecosystem. The application of blockchain technology can eliminate supply chain inefficiencies – particularly where end-to-end visibility is a challenge – while addressing quality, certification, reconciliation and counterfeiting.
Blockchain has huge potential, but most firms are maintaining a watching brief. My advice is not to wait. Here are three tips that should help:
1. Trial and test first
It’s true that enterprise-wide, multi counterparty blockchain solutions are, in the main, some way off. However many EY clients are piloting blockchain projects in specific parts of their supply chain before they embark on enterprise-scale rollouts.
2. Don’t leave it to IT
Our clients aren’t relying on the IT teams to drive the application of blockchain in an organization. The nature of blockchain demands cross functional involvement – from sales to customer service, procurement to manufacturing – to develop a solution that solves a real, operational problem. Without insights from everyone across the business, your first foray into blockchain will be no more than a lab experiment.
3. Keep your eye on the prize
Align your blockchain solution with a strategic goal in your organization – whether that’s optimizing costs, enhancing trust in your supply chain, improving trading partnerships or differentiating the customer experience. Work with your external business partners to uncover a blockchain solution that meets these goals.
Blockchain technology is real and it works. So, start with a pilot that generates immediate value and helps you to build a business case for broader adoption. And be sure to partner with an experienced blockchain advisor. With the right support, your company can begin to discover the value of blockchain technology.