For the past few years, critics of the new digital age, driven by blockchain technology and cryptocurrencies, have continually asked where are the “use cases” that prove efforts in this new sector have been worthwild? 2019 has become a year where results from years of investment in research and development in crypto related activities have begun to bear fruit. There have been a multitude of articles this year that have espoused the benefits of blockchain solutions across the globe in several commercial arenas.
Now a new study purports that Western Europe could save as much as $450 billion by applying various supply chain solutions courtesy of blockchain technology. For skeptics that have scoffed that blockchain is nothing more than a glorified spreadsheet, it appears that corporate executives and developers have already made inroads to unleashing the promised benefits of this new twist on a decentralized ledger system.
In a cooperative effort between Insolar, a Swiss enterprise blockchain firm, and Cointelegraph Consulting, a new service of the website to match companies with the most appropriate crypto solution providers, the combined group have produced a report, which claims that:
The implementation of blockchain technology in supply chains could save businesses in Western Europe $450 billion in logistics-related costs.
The effort behind the report began with an investigation and assessment of cost drivers present in the supply chain industry. A full 60% of companies surveyed stated that they had a problem of overpaying vendors. Another 70% spoke to the difficulty of tracking various items from point to point due to the prevalence of numerous unnamed intermediaries, all leading to what are called “visibility gaps” as to sources of supply.
The current use of disparate databases has only clouded the ability to access useful information. The study notes that:
The database approach fails to provide an inherent share of data related to the supply chain, which is crucial for counterparties that do not trust each other to obtain information about a certain product, its price, delivery conditions, etc. The information is not always up to date from some parties, and some data may be hidden.
There is presently a misconception that blockchain solutions would be totally disruptive, requiring a complete overhaul of legacy systems. Peter Fedchenkov, the founder of Insolar, dispels these misgivings by explaining that these new approaches will not do away with present IT systems. The beauty of these enhancements is that they can reside in existing IT environments and operate in tandem with legacy systems.
Fedchenkov notes that:
When people think about blockchain there is a misconception that it’s a new paradigm requiring a change in business entirely. We believe this is wrong though, and offer an approach to complement organizations existing IT infrastructures using our blockchain platform.
There have already been several articles of late that touted the use of blockchain strategies to optimize existing supply chain in industries such as diamonds, rare metals, fashion items, and food. Just two weeks back, we reported that European salmon producers have agreed to work together on blockchain approaches that will track fish products from catch to the restaurant table, employing software that will enable a restaurant to advise customers as to origin of the fish they have chosen to order.
At the end of the day, the deployment of resources must produce financial benefits that are measurable down the line. The supply chain industry is in transition, searching for efficiencies that will produce lower costs. The study concludes:
94% of supply chain leaders say digital transformation will fundamentally alter supply chain management. In the transition to industry 4.0, industrial business can expect a 25% gross increase in [Return on Capital Employed] by 2035.