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The Real Deal: How Blockchain Works in the Supply Chain

If you’re still not sure how blockchain and supply chain are interrelated, here’s how three different pilots are already bridging that gap.

With its promise of turning traditional means of transacting business on end, blockchain still remains somewhat of an enigma for the typical organization. By now we all know it’s an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. But what exactly does that mean in relation to the way we do things now, and what is blockchain going to look like in real-life once it hits the big time?

To help answer these and other questions that electronics buyers may have about this new and often-misunderstood advanced technology, we found four new examples of how it’s already being put to work in the supply chain. Here’s a look at the initiatives and how they’re providing value for some of the early players in the space:

Mercedes-Benz: Real-Time Snapshots of Supply Chain Integrity

Mercedes-Benz recently announced the launch of a prototype blockchain-powered supply chain to manage its complex global network of partners. According to Manufacturing.net, the ultimate goal is to provide transparency beyond the company’s direct suppliers. In Mercedes-Benz’ blockchain model, sub-supplier sign-offs are recorded and visible to authorized users, providing a significant boost to the company’s goal of sustainable and ethical conduct in its supply chain.

“The company no longer has to rely on trust in its intermediaries,” Alex Rosen writes. “It can see, in real time, the integrity of the supply chain.” According to a company press release, the automaker’s blockchain prototype allows a transparent mapping and understanding of this transmission across the entire supply chain. Should one of the sub-suppliers deviate from the contractual obligations, this becomes visible in the blockchain, similar to a secure accounting system. The company is now testing out supplier acceptance and soliciting feedback via an active pilot project.

Manufacturers Improve Data Sharing with Blockchain

Next year, Japanese manufacturing companies will begin to share data using blockchain. Participants include Mitsubishi Electronics, Hitachi, tools maker DMG MORI, and manufacturing robotics companies FANUC and Yaskawa Electric. The project is supported by Japan’s Ministry of Economy Trade and Industry (METI), Ledger Insights reports.

“By sharing their data, 100 manufacturers hope to enhance competitiveness and the quality of production,” the publication adds, noting that the project isn’t purely a blockchain application. However, blockchain technology will be used to enable companies to share the data and ensure it hasn’t been tampered with.

The Industrial Value Chain Initiative (IVI) is supervising the project, which supports its goal of improving how information is shared along the supply chain. “This isn’t just a matter of sharing data about the products themselves but also sharing how the manufacturing equipment is functioning with equipment suppliers,” Ledger Insights writes. “Additionally, it will include quality inspection information and product designs.”

Pharmaceutical Blockchain-Supply Chain Pilot

Automakers aren’t the only ones playing in the blockchain field right now. Not to be outdone, the pharmaceutical industry is also dipping a toe in the pool. In June, Walmart announced that it was selected for a pharmaceutical supply chain pilot. As reported by Chain Store Age, Walmart, KPMG, and Merck were chosen by the U.S. Food and Drug Administration (FDA) to be included in a program in support of the U.S. Drug Supply Chain Security Act (DSCSA). The pilot is intended to assist drug supply chain stakeholders, including the FDA, Dan Berthiaume writes, “in developing an electronic, interoperable system that will identify and trace certain prescription drugs as they are distributed within the country.”

Intended to create a shared, permission-based blockchain network that allows real-time monitoring of products, the proposed network is expected to “help reduce the time needed to track and trace inventory; allow timely retrieval of reliable distribution information; increase accuracy of data shared among network members; and help determine the integrity of products in the distribution chain, including whether products are kept at the correct temperature,” Berthiaume writes.

According to TechCrunch, the idea is to give each drug package a unique identifier that you can track through the supply chain from manufacturer to pharmacy to consumer. “The blockchain would provide an irrefutable record of each transaction as the drug moved along the supply chain,” Ron Miller writes, “giving authorities and participants an easy audit trail.”

“The pilot project is scheduled to be completed in fourth quarter of 2019, and results are expected to be published in an FDA DSCSA program report,” Berthiaume concludes. “At that time, the project’s participants will evaluate the next steps.”

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