Blockchain: Boost Supply Chain Security Without Sacrificing Speed
To keep business running smoothly, logistics providers and manufacturers have to maximize visibility and speed throughout their supply chains. Digital technologies and associated data are key to meeting these needs. But digitization is increasingly exposing supply chains to potentially costly cyberattacks. This is where blockchain promises to deliver the security today’s companies crave.
Modern Supply Chains: Complex, Fast, Vulnerable
As supply chains become ever more complex, they rely on digital technologies to enable all-important visibility and speed. But while digitization delivers on both fronts, it also has a downside: In recent years, a growing number of businesses worldwide have fallen prey to cyberattacks on their supply chains, and hacking of this kind is now a near daily occurrence.
Cybercrime in the supply chain can take many forms. By faking digital shipping documents, for example, malicious hackers can steal cargo by making what appear to be perfectly legitimate pickups. And it’s not just physical goods that are risk: Manipulation of digital invoices enables other costly forms of fraud and theft.
Global Players at Greatest Risk
No matter what size your organization, cybercriminals can pose a serious threat to your business success. However, the cost of hacks is especially high for companies with supply chains spanning the globe, who can suffer losses running into the three-digit millions. And the longer your supply chain, the greater its exposure to cyberattacks.
Visibility and Security: A Delicate Balance
One of the toughest challenges here is to find a way of reconciling the demand for high visibility with the equally pressing need for cast-iron cybersecurity. To achieve the desired levels of performance in their digitized supply chains, companies must share ever greater volumes of data, potentially opening the door to hackers.
Building Security and Trust Throughout Global Supply Chains – with Blockchain
The solution to this dilemma comes in the form of a technology that’s been around for a while now – blockchain. Initially used in the finance sector as a record-keeping technology for the cryptocurrency Bitcoin, blockchain offers a way of quickly and securely authenticating almost any kind of transaction.
But what exactly is blockchain, and just how can companies deploy it to secure their supply chains against manipulation by intruders?
Blockchain in a Nutshell
In simple terms, blockchain is a distributed ledger that records a “chain” of business transactions (“blocks”) securely and immutably. When each block is created, it receives a unique hash. This is generated in relation to the hash of the preceding block and depends on the data in the new block. Each block is interlinked cryptographically with the blocks before and after it, making it impossible to change one transaction in the digital ledger without changing all the others.
In a supply chain context, this provides unalterable evidence of transactions that persists over time so that everyone in the supply chain can be certain where any transaction originated. What’s more, blockchain eliminates intermediaries by allowing peer-to-peer interaction and data exchange between supply chain players. And because trust is baked into and automated by the tech, blockchain also has considerable potential for reducing supply chain costs.
IBM and Maersk Pilot Blockchain for Shipments
Such is the promise of blockchain that major corporations are already putting the technology through its paces in supply chain applications. For example, computing giant IBM and container logistics company Maersk recently teamed up in a joint venture focusing on blockchain for the supply chain. A pilot shipment completed with Saudi customs authorities showed how blockchain increased trust and transparency when it came to handling data – generating efficiencies and delivering valuable time and cost-savings for their clients.
BMW Leverages Blockchain to Secure Its Supply Chain
Another example of blockchain in action is automaker BMW’s PartChain project, which deploys the technology to verify the collection of transaction data in its supply chain and safeguard that data against tampering. And even greater things may be in store: BMW’s vision is ultimately to create an open platform that will allow secure exchange and sharing of data throughout the industry.
Covid Crisis is Fueling Tech Adoption
The current interest in blockchain for SCM applications has come from an unexpected quarter – the ongoing Covid-19 pandemic. In a situation where rapid responses are literally a matter of life and death, it has become clear that conventional supply chains often struggle to deliver critical resources where and when they’re needed. What’s more, collecting essential data and making it available to decision-makers fast has proved considerably more challenging than expected.
In view of this experience, blockchain solutions that had been under development for some time are now being reconsidered and rolled out to address these and other pressing supply chain issues. And as well as playing a significant role in tackling the Covid crisis, these solutions will be key to business success going forward.
Shape up for the Future
If you’re looking to get your digital supply chain fit for the challenges of tomorrow, now’s a good time to start looking into blockchain. After all, what other technology can promise bullet-proof security while enabling you to maintain all-important visibility and speed?