Can Blockchain Help Fix Broken Supply Chains in 2022?
Blockchain in Supply Chain was a hot topic - then fell very quiet. Where is it today?
We first heard about the potential of blockchain in supply chains several years ago, and almost immediately were thrust into a cycle of hype and hope of what they could do for us, followed by a "trough of disillusion" when nothing moved as fast as we had wanted. But that doesn't mean startups, enterprise and consortia alike haven't been quietly working to advance the technology, and pushing to apply it in ways that we may not have expected.
Modernizing Old Critical Tech
One nonprofit consortium, the Baseline Protocol, has been working on what they call "baselining" enterprise systems. By creating a layer on the Ethereum blockchain that enterprise ERPs like SAP can communicate in a unified way, enabling cross-company and inter-enterprise communication. Coca Cola is currently piloting this in their bottling companies in North America, and is seeking to improve transparency across the bottling supply chain.
Baseline Protocol is also working to modernize EDI, a technology that has existed since the 1940s, to connect disparate systems for things like order placement, invoicing, inventory tracking and more. Baseline is backed by Microsoft, Consensys, EY and Accenture.
Bringing Government into the Future
One Slovenia-based startup, CargoX, recently announced a deal with the government of Egypt to assist with modernizing customs procedures for ocean freight in the country. Thrust into the public eye by the Ever Given mess in the Suez Canal in 2021, most people don't know that the Government of Egypt has been undertaking one of the most significant modernizations of port procedures in the world since 2019. With COVID-19 making ripples throughout the industry, all steps to modernize and improve have helped Egypt offset many issues others have been experiencing.
The CargoX platform facilitates customs procedures by providing Advance Cargo Manifestation technology to Egypt, with the goal of reducing time held in customs, money spent on physical documentation, and unlocking automation and general efficiencies through the Ethereum blockchain. The reported efficiencies include a reduction in cargo release time from 29 days to 9 days, a reduction in compliance costs from $600 to $165, and a general reduction in detention and storage costs. CargoX is also known for its digital blockchain-based Bill of Lading documentation for shippers, saving time and cost.
Sustainability and Traceability of Materials
The United Nations Economic Commission for Europe (UNECE) and the UN Food and Agriculture Organization (FAO) have joined together to launch a cotton traceability project on top of the Ethereum blockchain. With the goal of increasing visibility and benefitting small family farmers in Latin America, the project is designed to show how small farmers can join together and utilize technology to not only improve the way they operate and engage with the global market, but also improve their lives and their livelihood in the process.
With cotton being notoriously hard to trace to origin, this provides garment manufacturers the opportunity to verify not only the sustainability of their supply chains, but also as a check and an audit to prove Fair Trade claims to consumers and governments.
Where do we go from here?
Blockchain in supply chain was a hot buzz phrase of 2017 and 2018, but quickly moved to one that generated eye rolls at industry trade shows. By moving past this quick boom and bust hype cycle, nose to the grindstone startups have continued to build in public and private as the blockchain infrastructure continued to grow to support their goals. Paul Brody, Global Blockchain Lead at EY, echoes this sentiment, saying that while Blockchain may not fix the supply chain by itself, it does provide a clear and open communication system that was sorely lacking in the past.
Moreover, enterprise-grade systems typically have not been very friendly or accessible to small and midsize businesses. ERPs, TMS and WMS are notoriously challenging to set up, and have an out of reach cost not only to procure, but to maintain long term. Typically new enterprise software implementations will cost millions, and require hiring consultants, as well as in-house employees.
Open access and open source systems like Ethereum enable inclusivity in building supply chain applications that can be used by businesses of all sizes, at a cost that scales proportionally with their business; not one that has a high barrier to entry like present ERPs.
Fast forward to 2022, and the startups have climbed out of the disillusionment, into the "slope of enlightenment" as Gartner terms it, and now have growing, verifiable use cases around the world. Blockchain, especially public chains like the Ethereum network, now are showing their true potential in becoming the "HTTP" of supply chains.
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