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OM in the News: Blockchain’s Power to Transform Industries

March 19, 2018

A blockchain-based ledger of 2.2 million diamonds, created by Everledge, can trace the journey of each stone from when it’s pulled from a mine to its purchase at a jewelry boutique.

We have blogged a few times about blockchain recently, and are adding material on it to our SCM and MRP chapters as we prepare for the text’s new edition (coming out Jan. 1st, 2019). “What is blockchain? It’s essentially a secure database spread across multiple computers,” writes The Wall Street Journal (March 12, 2018). Everybody has the same record of all transactions, so tampering with one instance of it is pointless. “Crypto” describes the cryptography that underlies it, which allows agents to securely interact while also guaranteeing that once a transaction has been made, the blockchain remains an immutable record of it.

Blockchain has the power to transform many industries because it’s well-suited to transactions that require trust and a permanent record, and it typically requires the cooperation of many different parties. In this way, blockchain resembles “the cloud.” It gives industry new business processes and new ways to charge for services.

Take logistics. Already, 1.1 million items sold or on sale at Walmart are on a blockchain—including chicken and almond milk—helping the company trace their journey from manufacturer to store shelf. Global shipping giant Maersk uses the same technology to track shipping containers, making it faster and easier to transfer them and get them through customs. Other companies using blockchain technology to track goods include Kroger, Nestlé, Tyson Foods and Unilever.

Israel’s CartaSense puts internet-connected sensors on freight pallets to determine when goods may be delayed or damaged. Its customers, rather than physically handing off scanned and signed paper documents, use a blockchain database on which freight companies can record every stage of the journey of a package, pallet or shipping container.

Classroom discussion questions:

  1. Why is blockchain becoming such an important SCM concept?
  2. Provide another example of where it could be used.
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