SCL Broadcast
Potential Transformation of Supply Chain Management with Blockchain Technology
Arnold, Luna
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In any modern and successful manufacturing business, supply chain management is one of the most crucial and complex pillars. Its logistics and operations are essential not only for a smooth flow of all resources but also for coordinating all involved parties to assure timely availability in any industrial process. Traditionally, the supply chain shows a centralized character with its business transactions, resource planning software, and any underlying databases, such as Excel sheets, which are stored in centralized ledgers. Technologies like Enterprise Resource Planning (ERP) Systems or Electronic Data Interchange (EDI) are already trying to improve the process. However, there are still limitations regarding transparency, security, and traceability.
This current state of supply chain management is increasingly inadequate for today’s standards because many enterprises include both suppliers and retailers in their supply chains that are distributed across the globe. Without improving supply chain management, the centralized nature of this approach could cause problems such as information asymmetry and delay for upstream and downstream cycles, limited transparency and traceability, and low logistics efficiency, resulting in a lack of mutual trust in the current supply chain systems. Additionally, consumers are becoming more conscious of the authenticity of goods. With a lack of reliable information about their environmental impact or ethical standards, the customers will also increasingly lose trust.
To sum it up, supply chain managers feel more pressure than ever to improve their systems.
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Blockchain's Impact on Supply Chain Management
The integration of blockchain technology is a potential solution for those shortcomings, especially the implementation of smart contracts. Smart contracts are encrypted, trackable negotiations that can facilitate and verify reliable, irreversible transactions without intermediaries. With smart-contract-enabled blockchain, agreements and transactions across the supply chain can be automated and safely stored on a decentralized level which allows logistics networks to benefit through improvements in security and fraud prevention. This technology can increase the attractiveness of products or goods to customers whose quality depends on the origin of their raw materials. Thanks to the irreversible records, certifiers, and standardization bodies can also verify the quality more efficiently.
Secondly, partners across the supply chain can better manage the production process of a product or material. Both parties can easily track and record required information on the product’s status with a timestamp and geographical location to fulfill any request and confirm receipts. This again makes the partners independent from any third parties, not even for financial transactions. As a result, this will further improve the financial flow and reduce the costs needed for paperwork or manual administrative tasks.
Use Cases of Blockchain in Supply Chain Management
Despite blockchain technology being in the early stages, multiple industries have already implemented it in their supply chain management:
Pharmaceutical Supply Chain: The pharmaceutical industry must consistently meet high-quality standards. Through a qualitative case study with one of the largest pharmaceutical companies in Egypt, it was proven that the use of blockchain technology enhanced coordination and communication between the supply chain members. Consequently, supply chain performance can also be enhanced while transaction costs and fraud risks of external medicine can be reduced.
Food Safety and Traceability: Hygienically producing and processing foods is one of the essential aspects when it comes to the food industry. Maintaining the necessary hygiene level for human health is becoming even more difficult due to the increasing international trade of foods. Since 2017, Nestlé has been utilizing the IBM Food Trust blockchain ledger, a modular solution built on blockchain,?to improve the traceability of several products.
Conflict Minerals and Ethical Sourcing: Unethical mineral extraction activities have been known to have severe impacts, such as the exploitation of child workers or forced labor, environmental degradation, and other violent conflicts. This is why sustainability standards such as SASB or ESG factors became more known, especially in the mineral and metal industry. The blockchain-based supply chain could provide more authentic and a higher density of information flow to increase sustainability-related expectations.
All in all, blockchain technology has already proven its potential to revolutionize supply chain management by effectively maintaining information and building trustworthy collaborations. In which other industries do you see potential improvements in the supply chain management through blockchain technology? Tell us about your ideas in the comments!
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The United Kingdom takes a major step forward in regulating cryptocurrencies and stablecoins
Prétat, Grégoire
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The Upper House of the UK Parliament recently voted in favor of a Financial Services and Markets Bill (FSMB) that could have a significant impact on the UK crypto landscape. The bill seeks to recognize crypto as a regulated activity and stablecoins as a means of payment under existing legislation.
The bill that paves the way for crypto recognition!
In July 2022, the government introduced the original Financial Services and Markets Bill, a comprehensive document of over 340 pages. Its aim was to regulate settlements in accordance with current payment laws. However, as the bill progressed through Parliament, legislators made amendments to extend regulation to all cryptos and oversee promotional campaigns related to this industry.
On June 19, the House of Lords, the upper house of the British Parliament, approved the FSMB. This approval is a crucial step in the legislative process, as the bill is now entering its final phase before adoption. This demonstrates that the UK government is seeking to give regulators the necessary powers to establish specific rules in the area of crypto. The Treasury, the government’s financial arm, has also engaged in consultations to develop these rules.
The goal: Catch up with the EU and challenge the US
Indeed, Andrew Griffith, Economic Secretary to the Treasury, has expressed the possibility of introducing new regulations over the next 12 months. This initiative aims to catch up with the European Union, which has recently finalized its own regulations through the MICA law, with the main emphasis on stablecoins.
Once approved by the House of Lords, the FSMB bill will follow the path to the lower house of Parliament for the development of a final version. After the agreement of both houses, the bill will be submitted to the king for approval and adoption.
Meanwhile, while many states are drawing inspiration from the European Union, which is developing increasingly clear regulations for cryptos, the United States continues its increasing hunt, risking killing technological innovation and this booming industry. At the same time, judicious jurisdictions such as Hong Kong are entering the scene by courting American giants in order to attract them to settle on their territory.
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Coinbase Report Reveals: More than 50% Fortune 100 Companies Embrace Blockchain Technology
Pontiggia, Céline
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A recent report by Coinbase suggests that the potential of the crypto space extends beyond what is typically highlighted in the news, such as exchanges, decentralized finance (DeFi) projects, and trading firms. The report reveals that 52% of Fortune 100 companies have been involved in crypto or blockchain initiatives since the start of 2020.
The “Fortune 100” is a prestigious list of the largest companies in the United States, chosen from the broader Fortune 500 list. The ranking is determined by considering the total revenues reported by both public and private companies to a government agency, with higher positions granted to those with the highest revenue figures in their respective fiscal years.
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Titled "The State of Crypto: Corporate Adoption," the report examines the quarterly analysis of initiatives by these companies. It highlights that 52% of Fortune 100 firms have invested in crypto, Web3, or blockchain projects since 2020. As of Q2 2023, 70% of these companies had publicly launched their crypto initiatives, marking the highest level since Q1 2020. The report also highlights that 83% of surveyed Fortune 500 executives that are familiar with cryptocurrency or blockchain confirm that their companies either have ongoing or upcoming initiatives. Coinbase suggests that these companies are investing in and innovating with these technologies because they recognize the need to update the traditional global financial system. They see blockchain as a foundational solution and understand that failing to keep up could lead to losing ground to competitors.
Notably, Fortune 100 companies have made 109 private venture capital investments in 80 crypto blockchain startups since 2017, contributing to funding rounds totaling over $8 billion. Citi Ventures, Google Ventures, Microsoft Ventures, and Goldman Sachs have collectively made as many crypto investments as all other Fortune 100 companies combined.
Despite the growing interest, regulatory uncertainty and a lack of clear rules for crypto and blockchain technology continue to pose significant obstacles to adoption. According to the survey, 87% of executives believe that clear regulations are essential for maintaining the US's leadership in the global financial system. Indeed, the report warns that the US risks losing up to 1 million Web3 developer jobs and 3 million related non-technical jobs to other countries between now and 2030 if it continues its current approach of regulation through enforcement.
The report also highlights the emergence of non-fungible tokens (NFTs) in the retail sector, which has sparked a surge in Web3 initiatives. While NFTs are not the primary focus for most Fortune 100 companies, they present an avenue for diversification and potential return on investment. The report indicates that Fortune 100 firms in the US earned approximately $101.3 million in cumulative royalty revenue from 199,347 NFT transactions, involving 118,354 unique users.?
In general, the Coinbase report emphasizes the significance of implementing well-defined regulatory frameworks to foster innovation, job opportunities, and uphold the US's leadership position in the global financial system. Moreover, it highlights the growing importance of blockchain technology in today's competitive landscape.
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