How Your Supply Chain Is Better On The Blockchain
A few ways to use Blockchain for Supply Chain
- Supply Chain Tracking and Transparency
- Borrowing Against Invoices
- Guaranteeing Provenance
- Security in Supply Chain IoT
- Smart Contracts
Supply Chain Tracking and Transparency
Especially in the fashion community, supply transparency has been a major concern. The Fashion Revolution began a campaign to show "who made my clothes." The movement is humanizing a manufacturing process that we forget is still controlled by human hands.
Forbes wrote an article several months ago about a blockchain company in the UK called Provenance, who is creating a system to track supply chains by using the trust encouraged by the blockchain system. By tracking the exact origins of a each component of a product we can increase: security, safety in recalled products especially foods, as well as create a transparent system for consumers to know about the journey that their products have taken.
Walmart is already doing experiments with blockchain technology for their supply chains for food tracking. But transparency and tracking isn't the only application for blockchain in the supply chain ecosystem.
Borrowing Against Invoices
SweetBridge is a new blockchain company that is developing smart contacts that may allow companies to borrow against invoices that are net against your company. This makes it possible for brands of all kinds from semiconductors to handbags to borrow against these netted invoices, freeing up capital for growth. Maybe? We'll see what happens. Learn more about SweetBridge.
There are quite a few companies that are developing systems to guarantee provenance of valuable goods. For example, Everledger is starting with diamonds, reducing fraud in the supply chain pipeline. For luxury brands who create high value products, supply chain matters a lot because trust matters a lot. In fact, it's estimated, according to the Everledger website that Jewelry fraud alone costs insurers $2 billion annually. And being able to track where a diamond is from can prevent brands from reaching ethical dilemmas with diamonds from areas of conflict. Read more on Wired.
You can guarantee provenance for all kinds of assets. For example, Bitmark handles provenance of digital assets. If I create a document or a drawing, I can create a record of that on the blockchain to guarantee its origin. Every digital object has a 'digital fingerprint.'
Security in Supply Chain IoT
Companies like Chronicled are focusing on security in supply chain IoT. "Chronicled secures IoT device identities, data, and event logs and automates IoT-dependent business logic through smart contracts." We've become very aware, especially recently that IoT devices are particularly vulnerable to being tampered with.
When would this matter? Maybe you have sensitive video footage and you need to guarantee that no one has hacked into that video footage and made a change without your knowledge. This could be true for all kinds of reasons, like security at the border, as described by Tiana Lawrence from Factom.
Another example might be in guaranteeing temperature in the transportation of foods and medicines. When might this matter for the fashion industry? Maybe you're knitting medical compression garments or garments that are high precision and created in a similar way where temperature and humidity can affect the tension of your knit and woven fabrics.
Furthermore, this technology increases the trust between supply chain vendors by taking away the ability for any single party to own the data. Maybe you've heard horror stories over order fulfillment errors that can cost large companies millions of dollars. This can be over simple disagreements about quantity or even about disagreements over whether an order has ever even been entered! A small designer in Oakland, CA once told me a story when she was first bootstrapping her apparel brand of a factory losing a 50 pc. order and telling her that they never received her fabrics and patterns (which she hand delivered). For a brand just starting out, ouch!
How can Smart Contracts help? Setting up smart contracts can hold both parties accountable for what happens. "Party A" makes an order of "10 units" from "Party B." Party B cannot alter the record to say that Party A ordered 100 units then charge them. Party A cannot withhold funds from Party B saying that they never placed an order. The contract is written in a permanent record. This is different from current systems which are very easy to tamper with. Even digital invoices can be altered, forged, and disagreed upon.
Blockchain systems, as they are currently proposed, and created to protect everyone in the system, not just one party involved, and reorganize the way that we deal with each other on a very human level. Still confused? Drop me a question on my contact form! I would love to hear from you!