Just as the internet led to the complete overhaul of processes, so blockchain is creating a profound transformation in information management, explains Alain Chevée...
The fact that such big companies as Nestlé and Migros are embracing the technology is proof that blockchain is discreetly moving past the irrational, cryptocurrency-fueled exuberance of 2017.
The objective is to create a trusted, shared, non-alterable system that guarantees key players in an industrial process access to the information concerning every step from manufacturing to distribution, and even to the end customer.
Let's illustrate the use of the Blockchain with a simplified case study involving the professional collaboration of a drug manufacturer, a logistics company, a network of pharmacists and an audit company to ensure the traceability of each batch of medication.
At the end of the manufacturing process and using a battery of connected sensors on the blockchain, the manufacturer records the date, quantity, temperature, quality and other relevant information of each batch. This data is accessible to all members, but they cannot modify them. Once the boxes are in the logistics company's truck or warehouse, the logistics company confirms the date of pick-up on the Blockchain.
This time-stamped confirmation then officially confirms the transfer of responsibility to the logistics company, which can then know the status, in real time, of all its stocks.
Upon receipt by the pharmacy, a new transfer takes place with a new change of responsibility. The pharmacist's explicit acceptance of the boxes can even trigger an automatic payment to the original producer via the blockchain (a ‘smart contract’). Finally, the auditor can then track the entire journey of the products and their quality by having access to a single system, knowing all owners of the product at all times.
Blockchain is gradually and profoundly changing the management of information within supplier, intermediary, and customer ecosystems
It could lead one to wonder how this differs from a simple shared database. The answer lies in several points:
- decentralisation: there is no owner who could take control of it
- transparency: all members can be allowed to own a copy of the blockchain
- no modifications: it is unalterable; a member cannot backdate receipt of a batch because subsequent transactions will be recorded and prevent modification of previous transactions.
- authentication: the operations registered on the blockchain are verified and come from sources using their own private keys
- smart-contract: a classic database cannot offer such payment triggering functions
The implementation of blockchain solutions for industrial activities raises new questions. For example, who sets up the blockchain, who sets up the parameters of operational governance and what about the trust in intelligent sensors or other people who have to enter information about the blockchain? The quality of the information entered is always essential.
Also, how to protect access to information to prevent an unscrupulous member from disclosing all historical exchanges and is it necessary, when a member requests information on a batch, that he can know all movements of boxes since inception
Blockchain is gradually and profoundly changing the management of information within supplier, intermediary, and customer ecosystems. Each new concrete application in one of these ecosystems will provide others with a new example of use and indeed stimulate others.
In our experience, many large companies are setting up working groups dedicated to the blockchain and that they’re finding concrete applications for it. By combining business and blockchain specialists, these companies are completely changing the way their industries work.
Companies will simply be more efficient and transparent within their supplier or customer universe, and therefore more competitive.
Alain Chevée is a director at Fintech Division - Blockchain and Institutional Asset Management, for Geneva Management Group.