I interviewed Julio Franca who discussed Applications of Blockchain in Supply Chain.

 

 

 

 

 

 

Applications of Blockchain in Supply Chain

 

The following examples are now in use or can be implemented today using existing technology.

 

Automotive supplier payments

 

Blockchain allows the transfer of funds anywhere in the world. Traditional banking methods are not needed. Transfer is direct between payer and payee. It is also secure and rapid – in minutes, compared to days for automated clearing house payments, for example. Bitcoin transfers specifically also offer lower fees. Australian vehicle manufacturer Tomcar uses bitcoin to pay suppliers. Currently, three partners in Israel and Taiwan accept this. Tomcar’s supplier agreements use standard terms. The advantage is in the cost savings. On the other hand, the firm is careful to avoid hanging onto too much bitcoin. While bitcoin is international by nature, some national governments see it as a way for companies to make an investment. Companies with bitcoin holdings may therefore be taxed accordingly.

 

Meat traceability

 

Product status at each stage of production can be recorded using blockchain. The records are permanent and inalterable. They also allow the tracing of each product to its source. Global retailer Walmart uses blockchain to track sales of pork meat in China. Its system lets the company see where each piece of meat comes from, its processing and storage, and sell-by date. In the event of product recall, the company can also see which batches are concerned and who bought them.

 

Electric power microgrids

 

This example shows how entities of any size can use blockchain. In other words, blockchain is not just for the big players. Smart contracts are being used for redistributing excess power from solar panels. The Transactive Grid is an application running on blockchain to monitor and redistribute energy in a neighbourhood microgrid. The program automates the buying and selling of green energy to save costs and pollution. The technology for running the program is the Ethereum platform, designed for building smart contracts of any kind.

 

RFID-driven contract bids and execution

 

RFID tags are commonly used in supply chain to store information about products. The tags can be read easily and automatically, then processed by IT systems. So, the logic goes, why not use them for smart contracts for logistics? The practical setup could be as follows. RFID tags for cartons or pallets store information on delivery location and date. Logistics partners run applications to look for these tags and bid for delivery contract. The partner offering optimal price and service gets the business. A smart contract then tracks status and final delivery performance.

 

Cold chain monitoring

 

Food and pharmaceutical products often need special storage. Also, enterprises also see the value in sharing warehouses and distribution centres, instead of each one paying for its own. Sensors on sensitive products can record temperature, humidity, vibration, and other items of interest. These readings can then be stored on blockchain. They are permanent and tamperproof. If a storage condition deviates from what has been agreed, each member of the blockchain will see it. A smart contract can trigger an action to correct the situation. Depending on the size of the deviation, this action may be to simply adjust the storage. However, it could also extend to changing “use-by” dates, declaring products unfit, or applying penalties.

 

 

About Julio Franca

 

 

 

 

 

 

Julio Franca

 

Director at Spin Consulting

 

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