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How To Incorporate Blockchain In The Supply Chain

Blockchain technology is most well-known because of its use in fintech, specifically in cryptocurrencies. However, the methodology of using distributed ledger (the technology behind the blockchain) in industrial application is not a brand new consideration. What blockchain introduces into the industrial sector is a robust trust system that can allow businesses to operate with more peace of mind. In 2018, SAP Insider data suggested that as much as 20% of the total customer base was using blockchain technology in their business operations. Blockchain technology has the potential to offer much to businesses and quite a few companies currently operating have discovered innovative uses of this technological breakthrough.

Tracing Food through a Supply Chain

Walmart has adopted blockchain technology to promote more transparency in their business model. Historically, products such as romaine lettuce have been plagued by breakouts of E. coli. By requiring its suppliers to use the blockchain, Walmart can effectively trace every product on its shelves all the way back up the supply chain and know from where it came with a surprising level of accuracy. This offers two benefits to the retail giant namely the ability to provide full transparency in its source of products as well as limiting the amount of product they need to pull from their shelves in the event of another E. coli incident. Additionally, because of blockchain’s digital nature, the entire system is streamlined for use, allowing the company to pull up supply chain records on demand leading to almost real-time isolation of problematic occurrences without disrupting the rest of the supply chain and maintaining cash flow.

Development and Issuing of Smart Contracts

One of the earliest innovations that the blockchain offered to businesses was the implementation of smart contracts. A smart contract, like a paper contract, outlines a series of criteria, which, when met, triggers a particular outcome which can be executed automatically. Once all parties involved in the deal are satisfied, the contract can then be processed. How a smart contract differs from one developed on paper is its ability to be traceable and transparent. While in a paper record, changes may be made before the last draft of a document and it may be difficult (if not impossible) to trace the evolution of that contract from its inception to its final form. In a smart contract, once the agreement is struck, it is immutable. However, it can be adapted and changed, but each change is recorded along with a time stamp to show its evolution from its original form to its final one. The most significant power that a smart contract has is that it doesn’t consolidate the verification process in one person, but instead distributes it across the entire peer-to-peer network and relies upon consensus of that network for its transparency.

Authentication of Products

Counterfeiting genuine products is such a large business that there are entire areas of industry in China dedicated to producing high-quality knock-offs of authentic products. Both the drug and fashion industry fall prey to this sort of underhanded production and see massive impacts to their bottom line because of it. One of the ways that these industries, including Toronto personal injury law, have attempted to combat the problem of counterfeit products is by developing a blockchain that registers the individual products as they are produced. The intended function of this blockchain is to record all currently produced items, and then, at a distribution location, a retailer may scan in a barcode to verify that the thing is indeed a genuinely produced product. In the case of the drug industry, this goes even further with the development of a public cloud system called the Information Collaboration Hub for Life Sciences, encouraging collaboration along the supply chain. Additionally, the blockchain will aid companies in complying with the US Drug Supply Chain Security Act (DSCA).

More Than Just a Fad

When blockchain first came onto the technology scene, many considered it a passing fancy. However, its current utilization in industry has proven that it’s anything but a flash in the pan. The benefits blockchain offers to several sectors can’t be replicated with any other current technology making it a valuable addition to these industries’ processes. SAP’s development of systems built around supporting and using blockchain technology makes it an ideal solution for companies who need a centralized software suite that understands and incorporates development within the distributed ledger field.


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  • Interesting, but I’m still struggling to see the point.

    As far as I understand blockchain has a clear tradeoff:

    much lower performances vs ability to function with untrusted parties


    I fail to see the value in a scenario where a central organisation (Walmart, USDA,…) has control over user authentication and authorization


    Hi, Chris Porteous

    Thank you very much for your introducing of blockchain and the implementation in the fintech, in the food supply chain, in the authentication, and in other business scenario.

    I  am going to learn more about blockchain in an open sap course.



  • ever since Ethereum getting split into ETH and ETC, blockchain has been anything but a fad and the existence of as many as three blockchain-related tiles on SAP Cloud are only a confirmation of the trend. integrating any of them into the central component is a separate endeavor altogether, though.

    thx, gm