Blockchain beyond the hype: Lessons learned
Last week we had the honour of learning about how companies can use blockchain technology in the supply chain from the expertise of Leontien Hasselman-Plugge, CEO at SIM, Simon Bager, PhD at University of Louvain, and Christina Singh, consultant at COWI. Blockchain however is no silver bullet and the concept needs some nuancing to understand its true potential! Here are some of the lessons learned:
- Blockchain can help improve transparency in global supply chains and has potential to make a real impact in relation to both environmental and social sustainability on the ground. By democratizing data and involving actors in the supply chain, companies can utilize the blockchain technology to build trust and get more accurate data in a timely manner. But blockchain initiatives for enhancing sustainability require a lot of commitment!
- Although there is no recipe for knowing whether a value chain is suitable for blockchain, we did get some relevant insights on this: First of all, you need to have some leverage as a buying company. Blockchain can be used as a tool to optimize an existing supply chain, which already has some formality in place. And for the technology to enable true progress, there has to be some level of trust to begin with. It is important that everyone in the chain needs to benefit from it, and needs to understand very clearly, what is ‘in it for them’. Better prices? Better markets? Or even direct interaction with consumers, who in some cases get the opportunity to give a ‘tip’ to the producer.
- Just to do some myth-busting: No, the technology is definitely no silver bullet for increasing sustainability in supply chains. However, it can provide a ‘highway’ on top of existing systems and initiatives. Blockchain technology can create some form of radical transparency and help companies get the basics of compliance and risk mapping in order, but even more so it can facilitate going beyond compliance. One example we heard of was the establishment off a ‘climate-neutral’ banana supply chain, enabled by blockchain. Through commitment and engagement as well as a much-needed shift in mindset the technology can enable better collaboration between partners in the supply chain, because data and knowledge is no longer centralised but instead known by all partners.
- Down the chain, producers and farmers can gain better access to information, a better market position and –most promisingly, better access to finance – which is one of the preconditions for them to make investments and switch to more sustainable production methods. This may be one of the major challenges that blockchain can help to solve in the future.