Blockchain breakdown: Why digital ledgers are going to revolutionise the supply chain
Digital ledger technology - otherwise known as blockchain - first appeared as a verification list or record used to track cryptocurrency transactions. Invented is 2008 by a person (or group of people) going under the alias of Satoshi Nakamoto, blockchain technology was initially tied to the cryptocurrency bitcoin, allowing it to become the first digital currency to solve the “double spend problem”.
What is a blockchain anyway?
Still a widely misunderstood technology, blockchain is essentially a constantly growing list of records, called blocks, which are linked together using complex cryptographical systems that make third-party interference nearly impossible. Each block contains a cryptographic hash of the previous block, a timestamp and a cache of transaction data.
Blockchains are constructed so that, should anyone tamper with a previous block in the chain, that information will then affect all subsequent blocks, which can’t happen without a consensus from the majority of users with access to the chain. This makes cryptocurrencies that run on a blockchain nigh impossible to duplicate or steal, and ensures the complete (or near complete) veracity of information and records stored in this fashion.
So, why does blockchain matter?
Well, top thought leaders across the supply chain space all agree on the fact that a key driver in the effectiveness of future supply chains will be a company’s ability to gain visibility and access to every aspect of their network, from accounting to distribution.
“In the future, companies will be competing on the supply chain, in terms of how connected, how transparent and how flexible that supply chain is, if you will, in terms of understanding if you’re experiencing disruption how to react to it,” commented Sean Thompson SVP, Business Network and Ecosystem, SAP Ariba and SAP Fieldglass.
The way that companies achieve flexibility and strategise regarding the interconnectedness of their businesses is through end-to-end visibility. The amount of data that is being generated, and has been generated over the past three years, quite drastically eclipses the amount of data that was generated previously in the whole of human history (frankly, it’s a miracle you found this article at all). As such, companies are now being presented with greater and greater troves of information about their internal workings and external relationships. But, how can they trust this data?
Michael Corcoran, Chief Marketing Officer at Information Builders, said in a presentation at the Gartner Data and Analytics summit, 2019, “One of the biggest and most difficult challenges with data is this: people don't trust their data. Who's got perfect data in this room? Anyone? Thank you for being honest because none of us do.” The ability for companies to trust their data is an essential - and currently missing - piece of the puzzle.
The level of reliability that a blockchain bestows on a record of transactional (or other) data is foreseen to be a gamechanger across all elements of the business landscape, but particularly in an area of commerce that involves more interaction between multiple departments, internal and external operators, and moves across more markets in more disparate regions than any other element of a business: the supply chain.
The blockchain-enabled supply chain
Initially used mostly to track and trace the progress of food from farm to table, digital ledger technology is beginning to experience a period of explosive growth that will likely see it become part of the landscape for any country that needs verifiable data authenticity when examining its supply chain.
Today, Market Research Future, an analytics and reports firm based in Pune, India, released its findings on the likely future of the relationship between blockchain and the global supply network. According to the report, the global ‘blockchain in supply chain market’ is expected to rise, from a modest valuation of $81.4mn in 2017, to exceed $3,4bn by 2023. This represents a cumulative growth rate of around 87%.
The report notes that “blockchain technology provides advantages such as improved protection against fraud and errors, improved inventory management, and faster identification of issues across the entire supply chain, resulting in increased user trust. The increasing need for manufacturers and distributors to maintain transparency in supply chain operations and minimize costs is likely to be the key driver for the global blockchain in supply chain market over the forecast period.”
Key players identified by the report include IBM Corporation, Microsoft, Ripple, Coinbase, Chain, Abra, Blockchain Tech Ltd, Earthport PLC, Bitfury Group, Deloitte and Digital Asset Holdings.
With the focus of the world’s leading tech players on the use case for blockchain technology’s integration into the global supply chain, full adoption is clearly on the cards over the coming decade.
In a recent interview with the University of Pennsylvania’s Wharton School of Business, Stefan Gstettner, partner and associate director at Boston Consulting Group said that “blockchain is relevant and has the potential to revolutionize industries such as health care or pharma, where authority applications, like FDA requirements, are becoming stronger…
“Since blockchain is a network play, we will see the biggest impact in situations where there are dispersed networks and where many parties are involved. It will have most impact in complex environments and less impact in, say, one factory”. The applications for highly dispersed, multi-element supply chains speak for themselves.
New FTC Chair Lina Khan to Break Big Tech's Hold on Economy
Formerly a legal activist and academic, Lina Khan is now in control of one of the most powerful jobs in the country. The U.S. Federal Trade Commission, or FTC, ensures that companies don’t artificially raise prices on consumers and that big companies abide by fair trade practices—and Khan has just been confirmed as the commission’s chair.
Right now, the FTC is highly focused on breaking up Big Tech, and Khan is by far one of the most vocal critics of Silicon Valley. Many tech leaders, in fact, see Khan as a threat to the companies they’ve worked decades to build. Ron Knox, a senior researcher at the Institute for Local Self-Reliance, summed it up. ‘Lina understands the vast potential of the FTC to really reshape the economy, de-concentrate markets, and democratise major parts of the economy’.
What Are Khan’s Views on Big Tech?
Good question. Many lawmakers have compared Big Tech to the railroads that crossed the United States in the 19th century—companies so large and powerful that the government eventually passed the nation’s first anti-trust laws. But Khan’s view is a little more complex. In it, she argues that the laws that applied in the past are virtually inapplicable today.
In a 2017 Yale Law Journal article titled ‘Amazon’s Anti-Trust Paradox’, Khan concluded that federal commissions should look at more than just price. In the 1900s, huge railroads could increase prices as much as they wished; today, Google and Facebook are essentially free for their users. But that doesn’t mean they’re engaging in free and fair competition. Despite the price, these companies still undercut their competitors.
For example, consider some of Amazon’s alleged business operations:
- Pricing at a significant loss. Unfair competition.
- Amassing vast stores of market data. Unfair advantage.
- Buying up smaller, potentially competitive companies. Unfair trade practices.
Just like the railroad trusts all those years ago, several Democrats have suggested that Facebook and Google be split up. Instagram, say goodbye to Facebook; YouTube, say goodbye to Google. ‘These firms essentially provide infrastructure to the digital age’, Khan told the BBC. What remains to be seen is what she’ll do about it.
The First Steps…
Currently, the FTC is suing Facebook for its social network monopoly and will soon evaluate Amazon as well. Biden is fully intent on breaking apart the firms that have ruled much of the American public for so long—and he has bipartisan support. So it’s no surprise that tech organisations are riled up.
‘Antitrust populism is inevitably going to become the governmental policy stance’, said Aurelien Portuese, the Director of Anti-Trust and Innovation Policy at the Information Technology and Innovation Foundation. ‘ [It will] cause lasting self-inflicted damage that benefits foreign, less meritorious rivals’.
But in 2021, tech companies may be on the losing side of public sentiment. Both Republicans and Democrats in the Senate have taken a highly aggressive anti-trust approach, and even intense trade and technology competition with China can’t stop lawmakers from investigating Big Tech. The majority, in fact, may agree with Khan’s sentiment: ‘Even when services are good for consumers, they can hurt a whole set of other interests—be it workers, business formation, or democracy at large’.