Paul Brody, blockchain leader with EY, describes the remarkable progress that blockchain technology has already made in the area of supply chain management, and how it must further evolve to reach its full potential.
When it comes to achieving transparent and secure end-to-end tracking within supply chains, blockchain is “actually making a lot of progress,” Brody says. “Particularly with regard to transparency and traceability, it’s moving along very nicely.”
The last couple of years have seen blockchain adopters move from pilots and proofs of concept to “large-scale production with nuance,” Brody says. Applications include modeling of bills of materials, merging of raw materials into finished goods, and tracking of lots for many kinds of products.
Companies continue to experiment with new ways of applying blockchain to the supply chain. They’re creating non-fungible tokens (NFTs) that allow for batch traceability and ownership of products such as beer. Blockchain is also being deployed for location tracking, with capability for storing immutable records of transactions as well as linking to changeable data that resides off-chain.
Blockchain has been accused of requiring immense amounts of energy to record transactions, but Brody says the criticism mostly relates to the mining of Bitcoin, not the use of blockchain for supply chain purposes. In any case, the blockchain being built for enabling supply chain transparency runs on Ethereum, which is 90 times more energy-efficient than Bitcoin, Brody says.
Blockchain is beginning to play a crucial role in the creation of so-called autonomous supply chains, which can operate without manual intervention through the use of “smart” contracts. When inventory levels fall below a present minimum, for example, the system can automatically reorder. If
For blockchain to realize its full potential in supply chain, the technology needs to mature and provide better privacy of data, Brody says.
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