Blockchain is the best mechanism currently available to deal with the problems in the supply chain, said senior advisor at Fantom Foundation Dai-Kyu Kim. His comments come at a turbulent time for the global supply chain.
Joined by EximChain CEO Hope Liu, Kim was part of a panel discussion at TechCrunch Shenzhen yesterday (November 20) focusing on blockchain’s applications in enhancing the global supply chain.
Within the tech world, the safety of core technologies’ manufacturing and distribution processes have recently been called into question with headlines of “spy chips” from compromised supply chains. Health risks also arise as a result of unsound practices, China’s recent vaccine scandal, in which 900,000 faulty inoculations were distributed around the country, is a prime example.
According to Liu, blockchain in the supply chain enables trust between individuals in the system without the need for middlemen. “When we buy something, from let’s say, South Africa, you have no idea who that person is,” said Liu. Blockchain creates a system of verification through consensus mechanisms, in which individual users of the blockchain verify the records that are created on it.
The production and distribution of materials, products, and services that are used every day are reliant on this intricate web of systems and subsystems. Despite living in an increasingly automated world, they are controlled manually, resulting in wastage and inefficiency.
“A large supply chain generates millions of emails, hundreds of hours of phone calls, and tons of paperwork,” Kim said, adding that blockchain could minimize some of these inefficiencies by using smart contracts.
But there are difficulties. Blockchain for the supply chain would need to be able to track huge numbers of items, requiring transaction volumes that run into the millions, beyond the capabilities of today’s technology.
Also, as supply chain companies adopt blockchain technologies with more frequency, so the number of blockchains will increase, giving rise to interoperability issues between the various platforms.
Kim says these issues are already being worked on. “In the third generation, blockchains interoperability is one of the key features that is being built into it. It doesn’t mean it’s going to work, but it’s going to be better than the [previous] generation blockchains,” he said.
Liu said that further experimentation should be encouraged. “Any effort in blockchain implementation, we should still encourage that because at least that’s a learning experience in what is going to be scalable and what is not.”