Blockchain refers to a distributed ledger technology that restricts post-data entry changes and ensures a network of trust and valid data, reports Steve Banker via Logistics Viewpoints. Such technology runs on multiple nodes (transactions), which give supply chains access to like information and enable data-driven decision making. Blockchain ensures the integrity of data, preventing changes in retrospect, which is crucial to multiple supply chain functions.
So blockchain is poised to change the world as we know it, but does it have limitations?
Although the benefits that blockchain will bring to the industry are staggering, it should not be thought of as a “fix all” when it comes to supply chain woes. Adding it to your operations will be significant– think increased visibility, traceability, productivity, and profitability, but blockchain on its own cannot guarantee the accuracy of your data. People and trust are still necessary components regardless of whether or not blockchain is in the mix.
Blockchain can hold the appropriate person or persons accountable due to its track and trace feature, but it cannot prevent legitimate users from entering inaccurate data into the system.
Ultimately, companies can implement blockchain into their systems today, but it is crucial that they continue to ensure their partners, suppliers, and users are trustworthy and understand the importance of data integrity.
Are there any solutions to combat these limitations?
Other new technologies like Artificial Intelligence (A.I.) and the Internet of Things (IoT) can complement blockchain technology to help reduce some of the risk.
For example, think data management. IoT has created big data by connecting billions of devices worldwide, and A.I is the perfect means to sift through that data due to the sheer volume of transactions it can process. Blockchain’s immutable ledger is well suited for data storage since nothing on the blockchain can be tampered with or altered. But as we discussed, it cannot prevent inaccurate data from being input onto the blockchain. Here is where other new technologies can come into play. A.I. is an excellent solution as automated processes eliminate human error and therefore, guarantee data integrity. When combined, the three emerging technologies can streamline data management.
So if you’re considering implementing blockchain, should you go private or public?
At this point, any organization that wishes to develop its an in-house blockchain-based system can as long as it has the necessary resources. That said, many choose to go the public route and with good reason. The problem with private systems is that they are not decentralized, and some party or group of parties own that data. They also limit the ability of all players in the space to use the same platform. This results in fragmentation, thereby reducing the benefits that blockchain integration is poised to add.
In other words, blockchain only holds value if all parties engaged in the supply chain functions have access, and if that data cannot be tampered with. As a result, public blockchains will effectively become the standard for the technology’s use in the supply chain.
So if blockchain has limitations, should you still consider it for your organization?
In short, yes. But be sure to take the necessary precaution of guaranteeing that all supply chain partners are trustworthy and be sure to look for a platform that takes advantage of the public blockchain, like our Track and Trace.
According to John Monarch, CEO and Co-founder of ShipChain, “Blockchain is not the cure to everything. It isn’t going to solve every problem we have. It won’t stop a truck from getting in an accident, a container from falling off a ship, or a train from derailing. That all being said, it is the solution to a lot of the technology woes the industry has dealt with like pieced-together systems that don’t always talk properly or incompatible EDI standards that are a giant headache to use and often have gatekeepers to work with them. These issues all lead to a lack of visibility and a lack of trust between parties. This only hurts our end clients, be it retailers, or consumers. Blockchain can help pull back the curtain and provide a unified layer of visibility, accountability, and trust in a system rather than parties. With more visibility naturally comes more efficiency, as you can spot problems sooner and work to prevent them. Blockchain will be what helps us collaborate to fix problems rather than everyone pointing fingers at one another when there is an issue with a shipment.”