Thoughts on … Blockchain and the supply chain

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By: Ann Marie Newton

The simplest explanation on Blockchain that I have heard is that it is an online ledger: "blockchain is an open and distributed register that can record transactions between two parties efficiently and in a verifiable and permanent way".[1] Some of the key elements of Blockchain explained by Iansiti and Lakhani in a Harvard Business Review article are:

  • Users of a Blockchain have access to all data, so no one can control the information
  • Each record is linked to the previous ones, once inserted any change would create an avalanche effect in the blockchain. Algorithms are used to ensure data accuracy.
  • No centralized entity is needed, such as a bank, individual transactions can be performed directly.
  • Each user has a code of over 30 digits that must access the blockchain, each user can share their personal information or remain anonymous.

You may have heard of Bitcoin, Ethereum or other crypto currencies, all of which use Blockchain technology. However, there is a much greater potential for Blockchain than currency alone. One of the most interesting advantages is the ability of Blockchain to be used for transparency.

Transparency is becoming increasingly important for retailers; more and more people want to know how and where the goods are made. This trend is very popular in the food sector, with patterns like "from farm to table" [2] , is becoming increasingly important in Fashion & Textiles. This goes hand in hand with ethics and sustainability. In order for retailers to understand if they are operating in the most sustainable way, if the products they buy are manufactured in the factory they believe to be, they need to know the information about the supply chain. Blockchain can help with this type of data tracking. When transactions occur along the supply chain, a digital record can occur at each stage.

This type of transparency and supply chain data have proven unreliable in the past, especially in the world of Fast Fashion. Fabrics and finishes can be quickly selected by a manufacturer or buyer to sell a new idea, often without knowing the whole supply chain, and in reality, one that they probably will not use yet, the point of view is focused on one order, one price, which can be delivered quickly. The priority here is to create a trendy garment at a great price. There is no thought for a long-term relationship, what the impact of raw materials is, where it comes from or how it is produced. Even if consumers can enjoy the advantage of this flexible and fast production method to produce the latest trend article, at an affordable price, what they do not see are all the repercussions of this way of working. Repercussions that it would not be a long time to connect some of our current large-scale social problems such as climate change, plastic pollution and poverty. Part of the ever-changing landscape that manufacturers and retailers face is that more and more people are starting to ask questions about how something is done, and this is becoming more important to more people.

So maybe Blockchain as a "new" technology can help with the piece of Transparency of our Fashion & Textiles puzzle, however, it is important to consider the environmental impact of Blockchain so that the benefit with respect to impact can be assessed .

Blockchain relies on energy and also creates energy in terms of heat generated by large-scale servers. Some of these server hubs are now being built in cold climates such as Iceland to reduce the need for electric cooling and also take advantage of low-cost renewable energy input from geothermal and hydroelectric sources. For Blockchain users, the more we consider the whole process and the system, the better, so we are not simply replacing one stranger with another.

Last April in London I participated in Blockchain Expo in Olympia, this was an event that took place over a period of two days. There were over 200 speakers, panel events, rows and rows of booths and a ton of people! What struck me was the presence of some great players in the room, such as IBM, Coca Cola, Lloyds and many small Tech companies I've never heard of. The variety of services and products under discussion is also interesting: supply chain monitoring, cryptocurrency, security, financial trading, app development, insurance … the list goes on. This gives the taste of the opportunity offered by Blockchain, is versatile and has many applications, so if you've heard of Blockchain or not, I bet you'll do it soon enough!

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