Blockchain’s Role When Supply Chain Disruptions Hit

During mid-March 2020, when the Coronavirus disease (COVID-19) pandemic hit the United States with unanticipated impact and scale, hospitals found themselves struggling to procure quality and essential personal protective equipment (PPE) needed in the frontline battle. Availability was uncertain, quality was questionable and trust in suppliers was eroding.

Here are five themes for how blockchain has helped when the supply chain disruption hit:

1. Trust was paramount, and that trust will survive the pandemic.

When the pandemic hit the supply chain, leading to shortages, price increases and quality distortions that cascaded from factories to ports to suppliers to consumers, buyers needed a system that could be trusted. Blockchain is known to create trust in the system without any one individual or company in the system ensuring the trust. The trust is achieved through trust in the ecosystem, which included trust on third-party verifiers, immutable data, immutable logic and audit trail of supplier information.

2. Blockchain provides the skeleton for trust; however, it is the ecosystem that brings it to life.

Blockchain provides the skeleton for creating the trust. However, it comes to life and offers greater value when more trusted industry players participate and contribute as validators, verifiers and solution providers working on top of the network. Each blockchain requires the creation of new industry ecosystems in which participants must work together.

3. Inventory visibility and transparency accelerates on-time delivery and adaptation.

When the pandemic caused a shortage of supplies, the buyers’ biggest need from suppliers were inventory visibility and transparency into delivery timetables. The solution was expected to provide real time visibility and transparency across the key supply chain pillars of procurement, manufacturing, transportation and distribution. In the case of a pandemic, critical supply delivery lead time misinformation could lead to significant loss including lives.

4. Simple solutions to solve pain points need to be swift to the market.

Blockchain solutions for supply chain can be very complex, supporting myriad use cases with a large consortium providing the single source of truth. One cannot build these solutions overnight when a pandemic hits. In order to be swift in the market, re-use solutions that are proven and available in the market being used by suppliers over the years. The level of integrations can be daunting and can take years.

5. Trusted digital identities bridge the trust gap between reality and the digital world.

Blockchain-based digital identity played a major role in creating trust. Digital identity is about linking real-world identities and the digital world. Each physical object’s digital replica (known as a digital twin) is created in a way that prevents or reveals any human interference that alters information. For a digital business transaction on supply chain, it is substantially important to prove the authenticity of one’s own identity and to verify that of the transaction partner.

Additional aspects of blockchain that also contributed to supply chain resiliency during the pandemic include data privacy, confidentiality of shared data, innovative business models that glue together stakeholders in the ecosystem and third-party solution integrations that work on top of these ecosystems. With many blockchain supply chain solutions on the rise, and interoperability actively being addressed, our society will have quicker resilience when we encounter the next pandemic.