WEF Report: Blockchain Helps Solve Global Supply Chain Issues

According to the latest report from the World Economic Forum (WEF), blockchain will help solve problems inglobal supply chains due to the coronavirus pandemic.

Health crisis due to pandemicThe coronavirus has led to the fact that almost all industries have suffered in one way or another and are now experiencing difficulties. While the depth of the unfolding crisis may be unprecedented, the authors of the World Economic Forum report argue that blockchain — key to mitigating the current problems.

WEF Digital Trade Director Ziyang Fan(Ziyang Fan) and co-founder and executive vice president of the SKUChain blockchain project, Rebecca Liao, argue that technology can ensure supply chain transparency, which is crucial both during normal production and during a crisis.

According to the authors of the report, so far manyglobal companies have delayed the digitization of paper processes because of concerns that the costs of digitization will not justify the benefits. Therefore, logistics networks are still heavily dependent on physical signatures and printed documents, which require the personal presence of personnel at various facilities to ensure continuity of operations. One example is a bill of lading for shipping, a paper copy of which is still required by law.

These paper operations reduce transparency andincrease risks during periods of disruption, reducing the ability of firms to respond quickly to changing circumstances. The authors of the report argue that governments and firms with powerful digital infrastructures, such as electronic signatures and electronic transaction support, already cope with the current crisis much better than those without such tools.

However, the resistance to switching to digitaltechnology is not just about spending, the report says. Companies are allegedly concerned that transparency without strong data privacy would jeopardize their business advantage. They fear losing control over access to confidential information about their internal operations, prices and sources. The authors of the report explain how blockchain can solve these problems:

“If everything is created correctly, then suppliers cancheck your permissions to exchange data directly on your own blockchain node. At the same time, their data can be safely distributed among other participants in the blockchain without requiring the two-way integration, which is necessary in centralized systems. ”

Given that the data for uninterruptedthe functioning of value chains is extremely important, the report notes that funding programs have already appeared to monetize the parties' access to performance and risk data. In this case, the blockchain can also serve as the basis for an effective and secure financing system in which "data exchange can be recouped":

“Buyers may, for example, useblockchain payment obligations as an alternative to a letter of credit, pay suppliers later, reduce the cost of goods sold and protect yourself from bankruptcy of suppliers. Suppliers, in turn, will quickly put revenue on balance and lower the cost of financing supply chains. ”

This is not the first WEF report on the blockchain. Back in September 2018, the organization announced that blockchain could increase trade finance by $ 1 trillion, as well as help solve environmental problems.

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