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Is Blockchain The Perfect Match For Supply Chain?

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Supply Chain Blockchain

Supply Chain Blockchain

Supply Chain Blockchain- Before founding my current company, a large part of my career was a long-term romance with supply chain. It all started in the mid- to late-1990s when a major client of the IT consulting firm I was working for was planning to start a multi-year supply chain program. I was sent to the client, which happened to be Australia’s largest building materials company, to take on the technical lead role to help design, build and automate their entire supply chain across quarry, cement, concrete, asphalt and transport.

That was my first major involvement in a large supply chain business, and because of it, my career evolved into enterprise architecture, particularly in ERP (enterprise resource planning). Although I have had several short stints in financial and other sectors, I always found my way back to heavy supply chain industries.

More than two years ago, I co-founded ShelterZoom and threw myself into the deep end of blockchain. That’s when I realized that many of my previous business challenges can be addressed by a very different approach: distributed ledger technology (DLT).

There are many impactful blockchain business use cases for industries like real estate, legal, government and financial services. While all of these are in various stages of maturity (with most still early stage), I am keeping a close eye on supply chain in particular — and I think anyone with more than a passing interest in blockchain should as well.

It All Starts With Procurement

Supply chain is driven in large part by the procurement process. Moving any product or service through a supply chain starts with a procurement contract, which initiates the tendering or bidding process via an RFI, RFP or other type of formal request. This process is often long, inefficient and frustrating. Talk about a great use case for blockchain!

Once the procurement contract is executed, the supply chain process kicks into gear, and your materials (or whatever you’ve ordered) begin their journey to your company’s — or third-party vendor’s — door. Everything moves through the process based on the procurement contract. It creates the master framework for everything to execute as intended. If you’re thinking that supply chain procurement is similar to how blockchain smart contracts work, then you are on the right path.

The Obvious And Not-So-Obvious Blockchain Benefits

I mention all of the above about procurement because I think it is the element of supply chain where blockchain can make the biggest impact, especially with bidding, contracts and process automation.

With bidding, there are typically multiple parties involved, and most processes are not transparent to the bidders or the customers. This gets especially tricky with large initiatives, like a coal seam gas JV project I worked on where third-party suppliers from other countries were often part of the mix. I often thought about how great it would be for everyone in the chain to have visibility into the entire process. The sums of money involved can get into the tens or even hundreds of millions, depending on the industry, so knowing where the breakdowns occur can have major financial implications.

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Article Credit: Forbes

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