Blockchain Solutions for Supply Chain Sustainability
Recent media attention surrounding the surge (and drop, and surge) of Bitcoin price, and the proliferation of non-fungible tokens (unique cryptographic tokens) highlight just two of numerous applications of blockchain.
This distributed ledger technology has also attracted attention in the sustainability space – in negative terms owing to the enormous electricity consumption of certain uses, and at the same time, its potential in the reverse: to provide energy solutions, to increase energy and cost efficiencies by streamlining transactions, and to create purpose-driven tokens to incentivize sustainability-conscious behavior. One of the most promising applications of the technology for sustainability, currently piloted by a handful of multinationals working in partnerships, is to address supply chain challenges.
Blockchain is a ledger of transactions (recorded in time-stamped ‘blocks’ that create a chronological chain of digital assets) distributed among a network of users. Once a block is added to the network and chain, the record is permanent, transparent, encrypted and immutable. No single user can control the ledger, and all members of the network can view the transactions. This architecture can be harnessed to demonstrate the provenance of products or raw materials. All aspects of the transaction can be recorded, from the identity of suppliers, and the date and location of the transaction, to the quality, price and other (agreed) properties of the product. A ‘smart contract’ with automated execution can be used to trigger payment or other subsequent step along the supply chain when prescribed terms and conditions relating to delivery have been met. This automated system reduces the likelihood of errors, and facilitates detection of suppliers that do not meet requirements.