By Tetiana Iakovenko, IBM Managing Consultant - Blockchain
Blockchain is already impacting our lives on a daily basis, not just by replacing money with digital currencies, but also by creating different ways for innovators to raise capital with token sales. It is increasing the speed of innovation, and creating millionaires in the process. When you think about enterprises that participate in exchanging services and goods, one thing that has always been lacking is trust. That’s why “middleman” enterprises exist; they reduce the efficiency of transactions by charging small — or not so small — fees to provide trust and proof-of-transaction. Creating trust between counter-parties increases the cost of goods and services, as you must cover the cost of middleman.
With blockchain adoption, middleman enterprises will not go out of business, but will have to change the business model to support and develop the blockchain industry-specific protocol, or become an auditing or hosting solution for the ledgers. Enterprises deploying blockchain will benefit from improved business processes, making it easier to change and solve critical issues of outdated processes and technologies. There are niche challenges in every industry; nowadays, that can and will be solved with this technology. Blockchain is not the solution for every problem, but when you think about multiple parties participating in the exchange and require one shared, encrypted ledger, blockchain becomes a clear answer.
Currently, enterprises have multiple copies, versions, and multiple databases supporting one simple process. There is no transparency or proof for a transaction between multiple parties that is recorded and accessible for everyone to see. Every enterprise maintains and manages their own system and if there is disruption to the process (like a claim or recall), it could take an immense amount of time and manpower to investigate and resolve it.
It is becoming extremely difficult to run the business and be able to grow revenue and innovate this way. For example, within the food industry, there is no transparency between the manufacturer and retailer, but consumers are starting to request proof of where and how the product was grown and delivered to the store (aka “farm to table”). This request for visibility into the supply chain will be driving the adoption of blockchain technology in this industry. Manufacturers have to start recording essential business transactions like receiving raw material, movement of mixes and packing of final goods onto the shared ledger. And retailers provide a similar visibility for received goods in warehouses and shipment and scans at the store level. The current recall process takes days, but with a blockchain based application, it will take minutes. This is a huge value-add to most participants in the food industry by reducing the amount of time and energy spent tracing recalls. With the increasing amount of food spoilage, contamination, and food-borne illnesses, the industry must adopt technology which will help to address those issues.
Blockchain provides transparency to the complete supply chain, from growers to consumers, as well as retailers and manufacturers who can now remove specific batches of contaminated items from the shelves within minutes. Advancing blockchain solutions in food safety will be even more impactful when designed in conjunction with IoT devices and RFID scanners that can provide more-timely data to reduce the waste of food and improve the supply chain processes.
The value of blockchain goes beyond just savings. With a single application to the food industry, blockchain has shown that it has the power to save lives, provide the sustainable way of growing food and remove fraudulent activities through a safer, more efficient food industry.