Pharmaceuticals: Keeping Them Cold and Real
Blockchain can improve the pharmaceutical supply chain in a variety of ways. We’ll look at two.
Keeping drugs cold: Pharmaceuticals, too, often need to be kept in a particular temperature zone. In a Hacker Noon piece, Samantha Radocchia of Chronicled explains how this could work. Many medications—especially biologics—being shipped from manufacturer to warehouse to another warehouse need to stay within a certain temperature range. With blockchain technology, this can be programmed in, triggering an alert when the temperature gets too high — or falls too low. “If the trigger is set within a delivery truck, you could set the air conditioning unit in the back to immediately turn on, or you could at least alert the driver to stop and fix the situation.”
Blockchain does more than monitor and verify, she explains. It can help “steward” medications from source to destination. And because all the processes and checkpoints are logged on the blockchain, the manufacturer or the shipper identifies and remedies trouble spots.
Eliminating fraud: Blockchain’s transparency may also help reduce fraud for pharmaceuticals, according to a report from Deloitte. That’s huge: The global counterfeit drug market size is around $75-200 billion, according to blockchain analyst Prableen Bajpai. The status quo—a complicated and opaque supply chain—exacerbates the problem. Blockchain’s immutability provides a basis for traceability of drugs from manufacturer to end consumer, identifying where the supply chain breaks down. In addition to cutting losses, there’s the potential to improve consumer safety and prevent some of the estimated 1 million deaths annually from counterfeit medicine, according to Deloitte.
Automotive Supply Chain
As we’ve discussed before, the automotive industry is ripe for transformation, and the potential is staggering. By 2025, the penetration rate of blockchain technology in functional areas such as retailing and leasing, supply chain logistics, and smart manufacturing will hit 37.2 percent, Frost & Sullivan predicts. In fact, EY predicts a blockchain across the entire automotive marketplace: Ownership, financing, registration, insurance and service transactions could all be tracked together.
But let’s focus on the supply chain.
Counterfeit parts: Determining provenance all along the way can help reduce the appearance of counterfeit parts within the supply chain. Deploying blockchain technology for supply chain logistics addresses a nagging problem for original equipment manufacturers — counterfeit parts. By being able to trace a part through every step of the supply chain, they can ensure the part that shipped is the part that arrived. That’s not news, of course. Connected Car Tech was talking about that back in late 2016. We’re not there yet, but we’re moving closer. And as IBM points out, this isn’t just relevant to the auto industry; it can apply to any industry that relies on parts.
Recalls: IBM offered this scenario: What happens if a part has a flaw that requires a recall? The status quo is deeply inefficient. Blockchain provides an alternative. Contingencies could be codified into smart contract. So, for instance, if the supplier discovers a fault, the provisions of the contract are triggered, and stakeholders are immediately notified once a permanent record of the flaw is recorded on the blockchain.
Bidding on business: Kouvola Innovation uses RFID tags to communicate shipping requirements to various carriers, reports Aftermarket Business World. The shippers then bid on the shipment and the contract would automatically be awarded to the one that best meets price and specs. Blockchain would track the shipments
Blockchain is helping verify the authenticity, provenance, and custody of diamonds across the supply chain, Forbes reports. Everledger, using Hyperledger platform, developed a blockchain solution for the diamond supply chain that’s designed to help prevent fraud and illicit global diamond trading. Each stone has what amounts to a fingerprint. It's “a forensic view like dental marks or iris scan,” says Leanne Kemp, CEO and founder of Everledger, tells Forbes. Around 1.6 million diamonds reside on that blockchain.
More Efficient Contracts and Payments
This issue crosses all industries, so it gets its own category. Currently, suppliers may demand payment in 30 days, but the process is usually dragged out in an “insanely expensive dance,” Paul Brody, global innovation blockchain leader at EY, explains in How Blockchain Revolutionizes Supply Chain Management. Blockchain can streamline this process “Using smart contracts, where the terms are payable upon receipt, a proof of delivery from a logistics carrier will immediately trigger automatic digital invoicing and payments through the banking system, with no analog gap between customer and supplier. The result has the potential to radically reduce working capital requirements and dramatically simplify finance operations, with a direct impact to the bottom line.”
The Elephant in the Room: Maersk and IBM
It’s impossible to talk about the impact of blockchain on global supply chains without addressing January’s big announcement.
Maersk and IBM are launching a yet-to-be named joint venture to use blockchain technology to make the global supply chain more efficient and secure. (The companies have been working together for several years; this merely formalizes the new company.) The new company initially plans to commercialize two core capabilities:
- A shipping information pipeline will provide end-to-end supply chain visibility and enable everyone involved in managing a supply chain to securely and seamlessly exchange information in real time.
- Paperless trade will digitize and automate paperwork.
Various partners have piloted the platform, including DuPont, Dow, Tetra Pak, Port Houston, the Customs Administration of the Netherlands, and U.S. Customs and Border Protection. According to IBM and Maersk, future partners will include General Motors and Procter & Gamble, among others.
Blockchain supply chain: Disruptive and transformational
These examples only touch on blockchain’s potential to transform the way we distribute goods. As a recent TechCrunch article put it,
“The blockchain has the potential to transform the supply chain and disrupt the way we produce, market, purchase and consume our goods. The added transparency, traceability and security to the supply chain can go a long way toward making our economies safer and much more reliable by promoting trust and honesty, and preventing the implementation of questionable practices.”
We couldn’t say it any better.