The global supply chain moves $64 trillion annually. It’s an unbelievably complex network and even small businesses are reliant on the logistics of this chain operating smoothly. In reality, the global trade network is a challenge for every business, regardless of size and anything that makes it more efficient is to be welcomed. Not only would more efficiency help businesses and their customers, it would also help the environment.
You might think that the information aspect of the Internet would have contributed to simplifying the global trade network, but it hasn’t. Add in the fact that the network has a vast number of intermediaries who establish trust between vendors, but don’t add value to the network, and the fact that it is usually up to humans to identify weaknesses in the supply chain and you can see that there is a lot of inefficiency already. However, there is a solution to this – the blockchain!
Blockchain and AI
If you combine the blockchain with artificial intelligence (AI) it is possible to build an autonomous and decentralised supply chain that can ‘think’ for itself. It would be able to identify areas of inefficiency and correct them. Some think this could be one of the most important developments in blockchain usage and the Blockchain Research Institute has commissioned a research study into the intersection of blockchain and supply chain management.
Don Tapscott, a founder and executive director at the Blockchain Research Institute has commented on the research study “Introducing Asset Chains” on LinkedIn Pulse and shared some of the high level conclusions with readers. The key points is: “Assets all over the world are extracted, designed, combined, transported, and sold every day through the supply chains that underpin global commerce.“ This system has not been overhauled for years and blockchain has the potential to decentralise these traditional supply chains. Add in AI and the Internet of Things and we can have a completely new approach to scaling the network.
Logistics on the blockchain
This new network would have the ability to self-regulate and adjust to improve efficiency. It would also be able to establish “machine trust.” And asset chains are an essential element of machine trust. As Tapscott says: “Asset chains provide a framework for machines to participate autonomously in supply chains and the markets they serve. They allow us to unlock the trading capability of machines without human intermediaries.”
That’s why some of the largest supply chain logistics firms are looking at blockchain to transform their operations. This will of course, give birth to a new group of companies providing these blockchain solutions. Tapscott cites the example of Sweetbridge, an Arizona-based firm that is, “leveraging the value of stranded, underutilized assets within those networks – like trucks or shipping containers – into more liquid tokens.” This means that a supply chain can basically fund itself.
This is an exciting way forward for the global trade network, and it is one in which human intermediaries will have fewer functions, making the entire supply chain less expensive, faster and more trustworthy thanks to cryptography and clever coding.