COVID makes a compelling case for blockchain

Is blockchain the solution to the lack of connectivity and data exchange built into our global supply chains?

The current pandemic has made a compelling case for the wider implementation of blockchain technologies, as it's highlighted a general lack of connectivity and data exchange built into many sectors, including our global supply chains.

"This has become abundantly clear over recent months," Mariam Al Muhairi, project manager at the Dubai Future Foundation, recently wrote in a World Economic Forum (WEF) blog post. "[And it's] quite staggering considering the fourth industrial revolution and Internet of Things (IoT) era we're living through. The fact we can track our Uber driver but not a shipment placed three weeks ago from a department store less than 10 miles from our home is startling, and needs addressing." 

 

Highlighting a lack of transparency

Al Muhairi points out that COVID-19 has highlighted a lack of coherence and transparency. "Within food and beverage, people are starting to question where their food is coming from. International trade is still recovering and we see the same issues with transparency - where are goods coming from, how long do they stay in certain places etc. We also see issues with business continuity - understanding where things are stopping along the supply chain."

She believes that blockchain is the perfect tool in these cases, as it provides one ‘source of truth' in a supply chain process.

"Building a platform on blockchain allows all parts of the supply chain to connect in one place, allows the owners of the platform to know where each part of the supply chain is, the transactions and payments schemes and - if there are IoT sensors - the condition of the goods."

According to Alex Manders, director of ISG Blockchain Now, it's likely that COVID-19 will actually drive future regulatory requirements related to food and agriculture supply chains supported by blockchain technology.

"We're seeing this in the US where policy changes are underway by the Food and Drug Administration (FDA) through its ‘New Era of Smarter Food Safety' initiatives," he points out.

 

How blockchain could help during the pandemic

The pressure created by COVID-19 highlights an urgent need for rapid global cooperation to strengthen the resilience and transparency of highly complex international supply chains agrees Nadia Hewett, WEF blockchain and digital currency project lead. She points out that some of the current critical pandemic issues could be improved through the implementation of blockchain solutions.

"The disruption to the supply chain, and use cases such as preventing counterfeit drugs, provenance of food quality, livestock, transparency of fund donation allocation can make the case ­- in the long run - for blockchain. For instance, problems with verifying the quality of ventilators and masks, and food quality issues, have been at the core of epidemic outbreaks."

An interesting day-to-day commercial application of blockchain technology, and also very relevant in the case of COVID-19, is how blockchain technology can improve verification of the credentials of suppliers. The current pandemic is necessitating organisations to find new suppliers and agile, fast and trust-worthy verification of supplier credentials is key.

There are various solutions already in production today, but as these solutions are further expanded there'll be much value for industries in the long-term, Hewett points out.

"As digital business interactions flow across borders in international supply chains, there will be many cases in which parties do not know each other before they conduct business together. The current acceleration of these blockchain solutions during COVID-19 will likely stimulate stakeholders to embark on new and also build on existing solutions where blockchain improves ‘trust your suppliers' solutions over the long-run."

 

Blockchain's role in controlling the virus

According to Radoslav Dragov, European blockchain co-lead at IDC, blockchain could also play an important role in the control of the virus.

"In these difficult times, the right balance has to be struck between data gathering and protection of privacy. Blockchain can be used to both gather and collate patient data more efficiently, monitor patients' movements to guarantee social distance and protect their identity at the same time."

It could also have a use as a verification layer in the future, "for something like an immunity passport, where the ‘authentic' test result will be put onto the chain and validated," says Al Muhairi.

"This extra layer of trust can only be a good thing," adds Todd Moore, Thales' senior vice president, data protection, "as you can track who has access to your data and where it resides. This is critical in keeping your data secure and mitigating risk."

 

Challenges ahead

The pandemic and subsequent lockdown has had a negative impact on many industries, and analysts expect a significant slowdown in technology spending.

However, "given the benefits blockchain can have in terms of reliability of the supply chain, transparency, and tracking the path of goods, blockchain investments are expected to only see a temporary slowdown in 2020 and recover soon after the pandemic eases," says Carla La Croce, IDC European blockchain co-lead.

It's important to remember however, that blockchain isn't a silver bullet, and the technology sector is still working through certain barriers to full-scale production; for instance legal framework operability and performance issues.

According to Manders, the three biggest challenges to blockchain deployment currently are education, developing business cases and governance and process designs.

"We need to educate businesses - or businesses need to educate their teams internally ­- on what blockchain can and can't do. That means understanding the software product market, the IT service provider market and consortium working groups. 

"Many organisations face challenges when trying to build a business plan or financial case to support a blockchain initiative, and often they will dive straight into the technology, and not fully plan for everything around it. They might need new business processes, to re-engineer old business processes, or to have a governance or target operating model in place to make the blockchain software successful," he notes.

There is growing support available to businesses interested in blockchain implementations, and one of the latest documents comes from the WEF itself. The organisation recently published a blockchain deployment toolkit, entitled Redesigning Trust, which is based on lessons from over 100 companies tried and tested use cases.

"As the world designs blockchain solutions to address further challenges, we need to ensure we deploy responsible solutions," says Hewett. "This toolkit, the first of its kind, will help users build and scale well thought-out blockchain solutions."

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