Companies that specialize in moving goods from one place to another are starting to use the technology that powers cryptocurrency to streamline their work, and they say it could help hospitals stay stocked and staffed during pandemics like the one caused by COVID-19.
Blockchain technology, as it's called, is already being adopted in the movement of goods from producers to suppliers, to stores, and to consumers. The technology is a form of distributed ledger, which stores encrypted information accessible to users. It can be public, as with cryptocurrencies, or permissioned, where information is visible only to network members that want to see it. Data kept on a blockchain, which is stored and verified by users across the network, can't be changed or destroyed.
Those working with the technology see it's potential to quickly locate vital supplies, the importance of which is being shown by shortages in protective equipment facing hospitals across the world.
While the technology is best known for its role powering cryptocurrencies such as bitcoin, its characteristics make it an apt tool in supply chain management, said Mary Lacity, a professor who runs the University of Arkansas Blockchain Center of Excellence.
In addition to moving goods and services, supply chains move information about those goods, which is where blockchain comes in, Lacity told CQ Roll Call in an interview. In traditional logistics systems, every link in the chain records and stores its own information on a separate system -- meaning everyone has his or her own version of the truth, she said.
Each time a good moves along that chain, information needs to be reconciled. Sometimes data gets left behind or corrupted along the way. Blockchain gives users one system, creating "a receipt that everybody agrees to," she said.
This has the added benefit of reducing costs by eliminating the need to reconcile data along the way, while shortening settlement times, and speeding payments. It would provide cybersecurity and mean greater transparency for consumers about where their goods come from, she said.
It's already being adopted in the supply of food.
Luis Macias, founder and CEO of GrainChain Inc., uses a blockchain system to empower small farmers. The company has partnered with coffee farmers in Honduras and connected them directly to shippers, distributors, retailers and financial institutions.
That's reduced reliance on predatory middlemen known as coyotes, who provide high-interest loans and transport goods at exorbitant prices. The end result is more money for farmers and possibly lower costs for consumers, Macias said in an interview.