Blockchain-Powered Supply Chains: Is Mass Adoption on the Horizon?

One of the big use cases that is brought up when discussing the efficacy of blockchain is how it can be utilized as a part of supply chains.

  • Research from MarketsAndMarkets shows that current uptake remains relatively modest, with market size in 2020 sitting at just over USD$253 million, predicting an annual Compound Annual Growth Rate (CAGR) of 53%, hitting $3,272 million by 2026.
  • Quince Market Insights tells a similar story, starting from a 2021 valuation of USD$375 million and predicting a CAGR of 69.5% for their forecast period which runs through to 2030.

As we can see, these are big predictions, but there is one question amid the hype that is begging to be asked; with blockchain being well-known for 6 years now, why hasn’t it already seen a phase of widespread adoption?

The INC4 team breaks this issue down, along with other supply chain insights in our chat with Igor Stadnyk, CEO of INC4, who has been working with an interesting blockchain-powered supply chain.

Who benefits from blockchain-powered supply chains? Big manufacturers, small-scale entrepreneurs, consumers?

Everyone! We are used to hearing the story of manufacturers benefiting from a more streamlined process, but we see many other successes:

  • Tea growers who are able to prove ownership and quality of their exports.
  • Farmers who are able to take out loans against their livestock that have been tracked and verified as collateral.
  • Government bodies who are able to track instances of exploitation and modern slavery occurring in a supply chain.
  • Consumers who are able to access real-time information about their products, all the way from origin to delivery.

As for the last point, developed countries often put a premium on quality information about the products they consume, with smarter purchasing decisions becoming more prominent. This can be a big selling point for a business trying to gain a wider share of a competitive market, especially in the retail and food sectors. I have been working with a blockchain company called Ambrosus, who has been partnering with Ukrainian suppliers entering the Singapore market. From origin to delivery, we are able to record and verify product data through the Ambrosus blockchain, leaving sellers and consumers in no doubt as to the quality of the products they are receiving and consuming.

What are the most exciting examples you’ve seen regarding blockchain use for supply chains?

Vaccines — Considering the pandemic, the obvious developments we have seen are regarding vaccines in supply chains. Recently we have seen StaTwig, a company backed by Unicef and the World Economic Forum introduce their vaccine ledger. Through blockchain, StaTwig aims to minimize the wastage that occurs when sending vaccines internationally.

Food — The WHO estimates that just in Europe, 23 million people fall ill from unsafe food annually. Then there are the high rates of food wastage, which are linked to climate change. Finally, there is an increasing concern about workers and their conditions in actually producing this food. We are now moving beyond the theoretical benefits that blockchain brings and are seeing real success stories. IBM Food Trust is used by big brands such as Walmart, Nestlé, and Unilever, with results found along each stage of the supply chain.

Fashion — Luxury brands have for too long been susceptible to counterfeiting, with research from PwC estimating that 2% of global economic output results from revenues linked to counterfeit goods. Being able to transparently trace the provenance of items through blockchain gives retailers and consumers confidence that they are purchasing and selling the real deal.

If blockchain is as beneficial as everyone says it is, why aren’t more companies using it?

This is a great question, and there are a few different reasons in my opinion.

Firstly, entrusting a set of business processes to the blockchain is still a technological leap of faith. There are supply chains that have been operating in similar ways for decades and suddenly reforming operations may seem more trouble than it’s worth. SMEs that have more of a flexible mindset are working with blockchain, which is transforming their business operations. This is fantastic, but it takes the bigger names to get others on board.

Secondly, there is still some uncertainty around blockchain regulation. It is a relatively new technology, and institutions in the healthcare vertical, for example, trying to agree on a common set of standards, we are not quite there yet, causing bigger businesses to adopt a wait-and-see approach.

Not the last, but another point worth mentioning relates to those who are trying to push blockchain solutions. There can be a lack of imagination in the way that blockchain is presented. While words like transparency, decentralization, and immutability are used repeatedly within a limited number of often theoretical use cases, there needs to be an approach that shows exactly how blockchain can benefit a supply chain’s operations from different viewpoints. As we talked about above, manufacturers, suppliers, businesses, and consumers can all benefit in a variety of ways, so let’s highlight compelling cases that move beyond the narrow ideas that are currently readily associated with blockchain.

What do you think will cause more companies to start using blockchain as part of their supply chains?

Well, we can see more companies from diverse sectors starting to use blockchain in their supply chains, whether that be tea companies, luxury jewelers, or raw material manufacturers. This increase is steady and moving in the right direction, so why does worldwide adoption need to be so fast?

There is often a feeling in the blockchain industry that if things aren’t constantly accelerating at a ridiculously rapid pace, then people will lose interest and adopt other systems. This very impatience is what causes people to put out inferior products, damaging the reputation of the sector they hope to contribute to.

I believe in the power of blockchain, and others do as well. Since the pandemic, we have seen companies rethink how they can better automate their processes. Other factors such as competition due to globalization and issues of regulatory compliance are also causing companies to look to blockchain for answers. When they do, it is our job to show them a clear and credible path with which they can achieve their aims, addressing the doubts that we outlined in the previous question.

You mentioned you were working with Ambrosus on a blockchain supply chain project. Can you tell me more about that?

Yes, I am currently the CTO of the Ambrosus Ecosystem, a public permissioned blockchain network that provides connectivity with IoT devices, sensors, ERP systems and other management software.

Ambrosus was founded in 2017 and we are based in Zug, Switzerland. Our robust and scalable solution has won us partnerships in Spain, Romania, Ukraine and Asia. Our passion is helping companies large and small to become more competitive and offer their customers’ greater value through the ability to transparently verify quality products.

Lately we have been working with innovative startups and SMEs in Ukraine, who are proud of the provenance of their products and are wish to optimize their business processes through blockchain-powered supply chains.

To this end, just recently Ambrosus partnered with Business Engineers Asia (BEA) to support the Ukraine 30 @ Singapore program, dedicated to the 30th anniversary of Independence in Ukraine, which is helping 30 Ukrainian companies enter the Singapore retail market.

These companies, mostly food manufacturers, have uploaded their data onto the Ambrosus blockchain, so anyone at any time can access proof of origin certificates, and real-time information about how the products are travelling along the supply chain.

What developments do you see in the next couple of years throughout this space?

There is no choice but for risk management and visibility in supply chains to become more important for businesses in any sector. This will result in a greater use of cloud-based, IoT, and blockchain services. Once more use cases start to come out and established companies see the benefits of modernizing their supply chains, we will finally see the growth that has been predicted by the studies referenced above.

In the meantime, my team at INC4 will continue developing blockchain solutions in line with best practices, helping bring greater usability, security and creativity to the space.

Founder and CEO of INC4, I help fintech firms create blockchain and cryptocurrency solutions.