Breaking Down Blockchain... Part 3

Breaking Down Blockchain... Part 3

This article is the third of a three part series which will explain what blockchain is and its effect on supply chain and distribution.

Blockchain Intersects with the Wholesale Distribution Industry

Business continues to become more global, making it important to optimize each process of the supply chain. Wholesale distribution plays a key role several times throughout the total end to end value chain, and the blockchain is promising to facilitate and safeguard the end-to-end process in the world.

For example, non-payment, counterfeit, or simply bad quality business transactions happen. Wholesale distribution engages with multiple stakeholders including suppliers, inbound transportation, customs, insurance, co-packers, outbound transportation, and banks. These stakeholders represent a kind of eco-system which will be the foundation of a private blockchain environment. This blockchain will have the following shared blocks: contracts, orders, deliveries, stock movement, invoices, payment, return, credit notes. These blocks act as a mirror in the inbound supply chain with suppliers all enrolled in the same private distributed ledger (the blockchain.) All activity that happens in wholesale distribution will be auditable and provide proof of provenance that will guarantee against, for example, counterfeit products. At the same time, having registered each part of the supply chain means this is also a full track and trace system. This track and trace capability is available to the relevant tiers in all sub-segments of wholesale distribution like food and pharmaceutical, but also industrial and high-tech segments where counterfeit is a real risk.

Because bitcoin is at the origin of blockchain, the ability for blockchain to make easier finance payments needs a special shout-out. Financial transactions can be through a private blockchain from a bank, which will accelerate payment transaction and slightly reduce them. These payment transactions could be done in one day free of charge if the wholesale eco-system choose one-day guaranteed public blockchain. Even though banks are investing massively, public blockchain could replace some banking services.

Wholesale distributors have assets like computers, trucks, warehouse pumps, and refrigeration systems that they need to track the use of. The life cycle of the asset is key for the safety of the chain. Each step in the life of an asset, like a maintenance operation, change of location, assignment to a driver, as well as un-forecasted breakdowns, could be managed in the private blockchain. If the asset is sold, a report can be run on the actions of the asset to the benefit of all -eliminating long discussions and researching in case of conflicts.

Imagine that all the spare parts of an asset and their provenance, all the technicians subcontracted or not having been involved, will each be memorized in the life cycle. In connection, the spare part itself will have its life cycle and variant creation in a connected, but different blockchain. This, for example, will allow a technician to know which spare part, between numerous variants, is necessary for an asset’s repair.

Using blockchain for hiring talent

Wholesale distributors need to innovate and attract the best talent. Here, public blockchain will soon be able to certify an applicant’s CV on university and work experiences, again by a distributed ledger where tiers will automatically confirm the CV’s point.

Blockchain will remove the middleman

If public blockchains have been designed to cut the middlemen and billions of dollars of expenditure at the same time, banks and wholesale distributors are both at risk. Banks have started to create private blockchains, claiming they are much more secure when the banks own them. Blockchain adaptation has not yet happened in the wholesale industry which still looks at it from a futurist perspective.

The right response will certainly come from a consortium where a group of entities or companies will own the Blockchain. Wholesale distribution must wake up otherwise their business will be squeezed into a logistics provider.