Here is an interesting article on the potential usages and advantages of employing blockchain to manage supply chains. It’s an interesting piece, and deserves reading. I like the fact that the author clearly identifies a number of instances in which this is being done. But I have a fundamental question about the key claim of the article:
As a distributed ledger that ensures both transparency and security, the blockchain is showing promise to fix the current problems of the supply chain. A simple application of the blockchain paradigm to the supply chain would be to register the transfer of goods on the ledger as transactions that would identify the parties involved, as well as the price, date, location, quality and state of the product and any other information that would be relevant to managing the supply chain.
The public availability of the ledger would make it possible to trace back every product to the very origin of the raw material used.
Unless I am reading this incorrectly, the author suggests that the blockchain would impart total transparency in terms of the major pieces of information along a supply chain, by making the identities of the parties involved and the prices charged and paid publicly available. While I am not a supply chain specialist, this feels like a pipe dream.
Through my work on ethical jewellery, I was once invited to take part in a couple of workshops organised by a start-up trying to produce a dashboard software that would help companies manage their own supply chains (mostly, but not exclusively, in the textile sector). A blockchain approach would certainly help with the data gaps that stakeholders identified at the time. But it would have consequences: companies considered information about who their supply-chain partners were, and especially the prices they paid, as trade secrets. To reveal this information would put them at a disadvantage against competitors.
When new technologies come along that promise to revolutionise the way society does ‘X’ or ‘Y’, it pays to understand that we don’t always stick to ‘less efficient’ ways of doing things out of some misguided denial of the promise of the future. Economic processes are instituted the way they are for perfectly good reasons.