Can Blockchain Fix The Global Supply Chain?

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In this special guest feature, Dr. Tim Wagner, CEO and Co-founder, Vendia, discusses why traditional blockchains are failing businesses and how enterprise companies should be thinking about data sharing solutions instead. Tim is the inventor of AWS Lambda and a former general manager of AWS Lambda and Amazon API Gateway services. He has also served as vice president of engineering at Coinbase, where he managed design, security and product management teams. Tim co-founded Vendia to help organizations of all sizes share data more effectively across clouds and companies, and he serves as its CEO.

If you’ve recently seen rows of empty shelves in stores, you know why the world needs better data sharing solutions.

The global supply chain is a complex system facing some serious challenges right now. Think about global shipping: An estimated 90 percent of the world’s goods are shipped by sea via roughly 60,000 cargo vessels. Each cargo vessel carries 24,000 containers. At that enormous scale, it is not hard to understand why everything from the cereal and milk you had for breakfast to the microchip in the device you are reading this on can be lost or delayed. And often these problems are due to communication issues as much as actual production or shipping problems.

Every business wants to understand their exposure to such incidents as they have real world implications for their customers and thus, the success of their individual brands. With the increased complexity of the global supply chain and deep dependency among suppliers and manufacturers, companies are experiencing new backlogs and information breakdowns on a regular basis, with empty store shelves and lower profits among the inevitable results.

On paper, blockchain appears to be the perfect solution to address supply chain coordination issues. Businesses can use blockchain technology to track cargo like you track an order on Amazon. The value of blockchain comes from its ability to share data quickly and securely in a way that’s also decentralized. Think of a gourmet chocolate retailer who needs to know important details about their product, such as when the new inventory will arrive, whether it was exposed to temperatures above its melting point during transit, and whether the cacao beans were ethically sourced and sustainably farmed.

Questions like these are impossible for a retailer to answer on its own, given the number and complexity of the multiple organizations and steps involved in the supply chain. Some larger retailers have attempted to deploy blockchain-based supply chain solutions to track this information and improve the predictability and continuity of their supply chains. However, while the business potential of blockchain is huge, many of these initial attempts end up failing, as companies find that first generation blockchain solutions like Ethereum and Hyperledger Fabric pose a large set of challenges in data integration, scalability, and overall performance.

Why are these traditional blockchains failing businesses? Because their designers made a crucial strategic mistake: They completely ignored the cloud. They ignored distributed system design principles by pursuing a “single box” architecture, leaving them inherently limited in their scalability, uptime, storage facilities, and saddling adopters with complex, expensive deployment challenges. Ethereum, for instance, can perform only 14 transactions per second, and that capacity has to be shared with everyone else on the planet, making it nearly impossible to build a business around.

Next generation blockchains have adopted a different approach. By using a cloud native, serverless blockchain solution, businesses can deploy data sharing solutions in minutes, instead of months, easily scaling to large numbers of transactions. This “born in the cloud” architectural approach allows newer blockchains to operate with higher levels of parallelism and scale, and offers customers significant advantages in terms of fault tolerance and high availability. By combining the trust and decentralization of first generation blockchains with the speed, scale, and affordability of cloud computing, next generation blockchains can take supply chain tracking and other use cases to the next level by sharing real-time data with anyone, across any cloud, at massive scale.

When it comes to mending challenges with supply chain tracking, serverless blockchain solutions ensure every party involved not only has real-time data surrounding the good’s location, status and quality, but can also better understand a specific good’s production and demand fulfillment. When companies have this level of detail, they not only possess the critical information needed to run their business smoothly, but they can then also offer better services and experiences to their customers, powered by the consistent, complete, and up-to-date information in a modern, blockchain-based solution.

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