Blockchain Technology Gives Global Supply Chains a Helping Hand

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In 2015, 55 customers were taken ill following an E. coli outbreak at Chipotle Mexican Grill outlets. As a result, the company’s reputation suffered badly. Sales dropped, and the company’s share price dropped by a crippling 42%. That was an all-time low for the company, and unfortunately, it’s a position they’ve been in ever since.

After the investigation, it appeared the problem Chipotle Mexican Grill had was one that many similar companies suffer from, and that’s a lack of transparency and accountability across its supply chains. With the company unable to monitor suppliers in real time, contamination was both unpreventable to begin with and uncontainable once it had been discovered.


To try and protect themselves against this, many startups now use a blockchain in which to transfer title and record permissions and activity logs so that monitoring across businesses and borders is carried out effectively. With this kind of technology computers of separate entities follow the same protocol to keep validating updates to a commonly shared ledger. One huge advantage with this type of system is that any problems of accountability or disclosure are no longer a concern. Data can be updated in real time, and it gives everyone in the network transparency to be able to monitor it as they wish.

When it comes to blockchains, there are essentially five basic principles that underlie the technology. They are:

1. Peer-to-Peer Transmission: Communication is achieved between peers opposed to going trough a central node. Each individual node stores information then forwards it on to all the other nodes.

2. Computational Logic: Because the blockchain is digital, it’s easily programmable so that users can set their own algorithms and rules to trigger transactions between the nodes automatically.

3. Distributed Database: Each blockchain can access the entire database and its history. There is no single party in control of the data, and there’s no intermediary requited to verify records of transactions as each party and do it themselves.

4. Transparency with Pseudonymity: Every transaction made is accessible to anyone across the system with every user on a blockchain having a unique alphanumeric address that identifies them. This information can remain anonymous or can be shared with others on the network.

5. Irreversibility of Records: Because of the way it works in a blockchain, once a transaction has entered the database it cannot be altered. This is to ensure that everything remains transparent and accountable for.


So essentially a blockchain is a system that promotes transparency and mediates trust. It’s also a system that easily allows users to attach digital tokens such as bitcoins, to goods as they enter through each phase of the chain. Dong this would give businesses greater flexibility in finding markets and price risk by grabbing that value at any point along the chain, whether it’s in the production, shipping, or delivery phase.

Some companies have already started making developments in this area. UK startup, Provenance, allows clients to use their blockchain technology to, “share your product’s journey and your business impact on environment and society.” Walmart has joined in with using blockchain technology to track its movement of pork in China, and BHP Billiton is using it to track mineral samples taken by outside vendors.

However, as with the implementation of any new system, there are still a few issues to iron out when it comes to blockchain technology. One area in particular that needs work is in the development and governance of the technology. The problem with a system that’s transparent is that it’s available for all to see, which may put it in a slightly precarious situation and more vulnerable to hackers. The second major hurdle is the law. Implementing blockchain technology into the law would not be an easy thing to do when considering the multiple jurisdictions that would be involved. Industries would first have to design a code of best practices and standards to adhere to.


Once these challenges have been overcome and weighed against the demands of a global economy still recovering from the 2008 financial crisis, only then can we move forward as a whole. If we can enhance transparency and control for both businesses and its customers then it’s definitely an avenue worth pursuing, and is why so many investors, governments, businesses, and academics are jumping on board with blockchain technology.


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