Product tracing and logistics are the most common applications of blockchain technology by commercial enterprises in supply chain management. This is according to a new report by the University College of London. It also revealed that the grocery sector was the most dominant area of application, with over half the projects analyzed operating in the sector.
The comprehensive research was conducted by UCL’s Center for Blockchain Technology with the support of the Retail Blockchain Consortium. It analyzed over 100 projects including startups, corporates, consortia and governments that are implementing blockchain projects.
Nearly half of all the projects analyzed operate in the groceries sector. The major applications in this sector include for tracing, in logistics and financial transactions. With more consumers keen to trace their food supplies, retailers have flocked to blockchain technology to get a competitive edge. One of the most prominent platforms has been IBM’s Food Trust whose members include Walmart, Unilever, Albertsons, Nestle and Carrefour.
Healthcare and fashion were the other two major sectors in which blockchain technology was applied in supply chain management, the report revealed.
Significantly, the research found that 15% of the projects are in the production phase. This refutes claims by some skeptics that firms are only throwing about blockchain technology as a buzzword to attract investment. The majority of the projects were in the pilot phase, with a significant portion in the development stage.
At 45%, services was the most dominant sector utilizing blockchain technology. Commodities at 22% and retail at 14% were the other high ranking sectors.
The research also looked at some of the challenges hindering the adoption of blockchain technology in supply chain management. The first is tamper proof tagging. The tag is the key to unlocking the full tracing of a given product on the blockchain. Therefore, it must be completely secure to prevent tag cloning. While several solutions have been applied such as QR codes and radio-frequency identifications (RFID), the retail blockchain industry is yet to come up with a perfect solution.
Other challenges include the ambiguous legislative structure in most jurisdictions which have kept many potential blockchain clients at bay. Scalability is also a major hurdle. With over half of the analyzed projects relying on private blockchains, they have been unable to scale and meet the market demands.
Blockchain in supply chain management has grown rapidly, with a report by Allied Marketing Research predicting the industry to grow by 10,000% by 2025. Some of the major global brands that have adopted blockchain technology in their supply chains include LG, Brimhall, Target, Volkswagen, Pfizer and AmerisourceBergen.
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