Dale Chrystie, a blockchain specialist with FedEx, sat down with The reBound podcast co-hosts Abe Eshkenazi and Bob Trebilcock to discuss how blockchain technology has evolved since its world debut in 2008 through Bitcoin and the future of blockchain in the business world. Although blockchain has been previously perceived as a new unproven technology, Fred Smith, Founder and Chairman of FedEx stated, “Blockchain is going to completely change worldwide supply chains and if you’re not at the edge of innovation, you need to be prepared to become commoditized.”
In simple terms, blockchain is data tracking, but its potential makes it revolutionary. A great example is the internet. The internet is the foundation for which different services like email, ecommerce, business transactions etc can be enabled. Dale Chrystie described blockchain technology in five words: digital, ledger, permanent, transparent and shared. Blockchain provides a peer to peer experience which enables secure and transparent transactions through a shared underlying IT infrastructure between trading partners. This allows for open communication between partners. Instead of a broker or middle man controlling the supply and demand process, it is something in between that is connecting the two trusted sources. The PPE.Exchange platform is connecting vendors who have verified products (the supply) with organizations in need of PPE and testing (the demand). With decentralized technology, the participants of a transaction do not need to trust one another, or anything in the middle, because a mutually developed agreement is codified and governs the transaction which automates the execution and movement of funds within a contract. By using a trusted service instead of a trusted person or persons in the middle of the process, the buyer and vendor is protected through the technology.
An analogy made in the podcast The reBound: Making Sense of Blockchain, describes the current business process for many as an assembly line of people passing along sandbags. There is a greater chance for an error to be made with multiple people interacting with the sandbag rather than one service or system taking the sandbag from point A to point B. This point is proved true as we have seen how the supply chain has been negatively impacted from COVID-19. Many businesses have lost large amounts of funds and/or received fraudulent PPE while trying to protect their organizations. Because of the increased demand of PPE, many have had to go outside their normal supply chains to untrusted and untested sources. With the implementation of blockchain technology and utilizing Smart Contracts, scams and fraudulent products are not possible because of the contracts automatically codified in the system.
A wide misconception of blockchain technology is that it is only beneficial to tech companies or teams within an organization that implement different software and technological advancements. With the use of Smart Contracts, a feature of blockchain, it affects an entire company and is not only a digital transformation, but a business one as well. Smart Contracts take many forms with one being a payment system. Most contracts are essentially if-then statements that can be codified. The reason why Smart Contracts affect everyone involved in an organization is because of the efficiency of the process. Instead of having a deal with net 10, 30 or 60, Smart Contracts can bring it down to net 0. How? By creating if-then statements/contracts that trigger automatic payout. For example, the buyer of PPE is worried the selected products will be damaged or late while on the other hand, the supplier is concerned about the proper payment. On the PPE.Exchange platform, a contract is automatically codified into if-then statements that match both the buyer and supplier’s deal demands. Once the products are delivered and inspected, the funds are released. Smart Contracts do everything automatically and authentically based on the code, which increases transparency.
Eshkenazi, A., & Trebilcock, B. (Directors). (2021, January 14). The Rebound: Making Sense of Blockchain [Television series episode]. In The reBound Podcast. Supply Chain Management Review.
Smith, H. (2021, February 7). 300,000 fake N95 masks ordered for dozens of Washington hospitals. King 5. Retrieved from https://www.king5.com/article/news/health/coronavirus/some-hospitals-buy-fake-kn95-masks-washington-state/293-1df632a1-ed19-4d6c-915f-10c1926b85cf