Blockchain has emerged as the next main technology for distribution markets worldwide. It is receiving spotlights for its abilities to enhance transparency of SCM (Supply Chain Management) and minimize any middle cost.
When blockchain is applied to distribution industries, trade environment that can directly connect sellers with consumers can be established. Middle steps can be eliminated by understanding various information on manufacturers and raw materials through records that are stored within blockchain. Not only blockchain can reduce infrastructure cost such as computerized equipment for managing sales volume or inventories but it can also reduce time that is spent on transaction. Blockchain is predicting a revolution within distribution markets.
◊Blockchain Changes Concept of E-Commerce
Blockchain is a technology that makes any counterfeit or modification impossible as members of network share information, verify information together, and store transactional statements. Blockchain users possess every transactional record from blockchain. Because intermediaries that prove transactions are not needed, sellers and consumers are directly connected through blockchain.
Blockchain reduces cost of unnecessary steps during distribution and increases effectiveness of transactions. It replaces roles of online shopping intermediaries such as Amazon, Alibaba, E-Bay, and Rakuten and it is completely changing a concept of e-commerce that connected sellers and consumers through intermediate businesses.
A Canadian online shopping mall called Openbazaar introduced a P2P (Peer to Peer) platform by applying blockchain concepts in 2015. This platform only provides space that allows sellers and buyers to meet each other and it does not charge separate fee. Because payments for transactions are made by Bitcoin, there is no fee for transfer or anything. Because sellers can reduce cost of fee compared to current open markets, they can expect higher amount of profits by using this platform. Consumers on the other hand can purchase products simply without any inconvenient steps.
◊Global Distributors Focus on Blockchain Technology
According to WHO (World Health Organization), there are about 400,000 people annually who die from illnesses that are caused by contaminated food. It is difficult to investigate causes that affect food safety since it requires significant amount of time and manpower to trade distribution process.
In 2017, IBM announced cooperation between blockchain and a consortium composed of global food distributors. Including the biggest American distributor called Walmart, Dole, Golden State Food, Kroger, McCormick and Company, Nestle, Tyson Food, and Unilever are part of this consortium.
According to a Chinese economic media called Caixin, Walmart participated in ‘Blockchain Food Safety Association’ with JD.Com and Tsinghua University in December of 2017. Their goal is to develop blockchain technologies that allow them to trace every step of distribution in real-time.
While IBM is going to provide blockchain platforms and developers, Tsinghua University is going to provide information on Chinese food markets and related knowledge. Walmart and JD.Com are going to develop technologies that are optimized for suppliers and retailers.
Walmart recently applied its blockchain technology to distribution process of pork meat, which had become troublesome due to poor sanitation environment of Chinese companies. By attaching IoT (Internet of Things) sensors to every distribution process and path such as pigs that are raised by livestock raisers, storages, and delivery trucks, it is able to store various information such as food for pigs, timing of butcher, and storage condition into blockchain network in real-time. Processing companies that butcher pigs and wholesale and retail stores also input relevant information into blockchain network. Through this technology, Walmart was able to reduce time to understand entire distribution process of pork meat from weeks to just minutes.
Walmart enhanced safety and credibility of food through its blockchain technologies. It is expected that other food distributors that also partnered up with IBM will soon introduce optimal technologies that are able to trace their products in real-time.
In South Korea, a food distributor called Samjin Food in Busan recently introduced blockchain technology developed by Samsung SDS. Whenever a consumer scans a QR code that is printed on top of a wrapper of Samjin Food’s product through a Smartphone, he or she can find out every information such as place of origin, manufacturer, manufacturing data, expiration date, and store in just a second. It is expected that this technology will improve credibility of products as it is impossible to counterfeit or modify blockchain.
◊Blockchain to Lead Smart Distribution
Blockchain technology also predicted a revolution within distribution industries as it can simplify documentation and payment processes that are needed for any type of distribution services.
According to an American media, Walmart recently applied its patents at USPTO (United States Patent and Trademark Office) to introduce its delivery system that is based on its blockchain technology. This delivery system is a ‘Smart Package’ service that records product location and storage condition into blockchain.
Its service registers information such as contents of products that are being delivered and current location into blockchain. It also handles surrounding and weather conditions right before products are shipped as registered data. Walmart is planning to apply a method that provides private keys to buyers and delivery companies so that they can open encrypted blockchain information. Because only senders and buyers can share delivery information, it is likely that these keys will improve security and accuracy of trace system. It is heard that Walmart is also looking into developing a delivery service that applies blockchain technologies to unmanned delivery devices such as drones in the future.
A global distributor called UPS joined ‘BiTA (Blockchain in Transport Alliance) in November of 2017. It is heard that about 200 global distribution-related businesses such as FedEx, SAP, and JD Logistics are currently members of BiTA. It is expected that they will focus on creating standards before expanding their blockchain-based distribution services.
SK C&C introduced its blockchain-based distribution service worldwide in May of 2017. It is a service that allows domestic and foreign shipping companies to share and manage distribution information through P2P method. It is able to reduce time and cost by eliminating any inconvenience of checking and registering status of cargos that are loaded onto ship one by one.
Samsung SDS is planning to introduce various blockchain-based ‘intelligent distribution services’ along with its food record system that was supplied to Samjin Food. In the future, it is going to expand its business globally by applying blockchain, AI (Artificial Intelligence), IoT, and Big Data technologies to its distribution services.
Staff Reporter Yoon, Heeseok | pioneer@etnews.com