Lessons learned from COVID: The role blockchain can play when supply chain disruptions hit

On April 27, 2020, IBM and Chainyard launched Rapid Supplier Connect (RSC), a blockchain-based network designed to help government agencies, hospitals and healthcare buyers to identify PPE suppliers in the United States. The participants included non-traditional suppliers who had pivoted to address the shortage of equipment, devices and PPE supplies needed for COVID-19 relief efforts with a greater efficiency.

The blockchain network, which was launched, free of fees, to help frontline healthcare organizations confidently identify and procure PPE, had unprecedented adoption. More than 500 buyers and suppliers joined in no time to quickly find each other, accelerated verification and onboarding processes, and gained near real-time insights into inventories of life-saving equipment.

Six weeks from ideation to market

During mid-March 2020, when the pandemic hit the United States with unanticipated impact and scale, hospitals found themselves struggling to procure quality and essential PPE equipment needed in the frontline battle. Availability was uncertain, quality was questionable, and trust in suppliers was eroding.  

IBM and Chainyard jumped in to help responders to battle the pandemic by launching RSC, leveraging Trust Your Supplier and IBM Sterling Supply Chain Suite, within six weeks.

Trust Your Supplier, owned and operated by Chainyard, is a production blockchain network with trusted source of verified supplier information and digital identity that reduces risk while simplifying and accelerating supplier onboarding and supplier management. IBM Sterling Supply Chain Suite provides inventory visibility and deep insights into supply chain activities. 

What are the reasons RSC had such quick adoption and successfully met its objectives? When looking back we identified the following five themes for how blockchain helped when the supply chain disruption hit:

1. Trust was paramount, and that trust will survive the pandemic

When the pandemic hit the supply chain, leading to shortages, price increases and quality distortions that cascaded from factories to ports to suppliers to consumers, the buyers needed a system that could be trusted.  Blockchain is known to create trust in the system without any one individual or company in the system ensuring the trust. The trust is achieved through trust in the ecosystem, which included trust on third party verifiers, immutable data, immutable logic and audit trail of supplier information. Trust Your Supplier, the foundation for creating the trust, and previously proven with thousands of suppliers, was the right choice to be quickly leveraged to build trust between buyers and suppliers during the pandemic.

2. Blockchain provides the skeleton for trust; however, it is the ecosystem that brings it to life.

Blockchain provides the skeleton for creating the trust. However, it comes to life and offers greater value when more trusted industry players participate and contribute as validators, verifiers and solution providers working on top of the network. Each blockchain requires the creation of new industry ecosystems in which participants must work together. RSC achieved this through multiple verification agencies helping to generate trust in the ecosystem, including:

• Dun & Bradstreet contributed its identity resolution, firmographic data, and supplier risk and viability scores to TYS network.
• CDAX served as a third-party paymaster, securing funds on behalf of buyers in a custody and settlement account and holding goods ordered contractually from the supplier under a consignment arrangement until the buyer verifies acceptance of the order and releases funds to the seller. 
• Project N95 served as a clearinghouse for information on COVID-related suppliers.
• RapidRatings provided financial health data on suppliers.
• KYC SiteScan provided “Know Your Business” due diligence report access. 
• Thomson Reuters provided access to its CLEAR customer due diligence tool to provide buyers with access to real-time and comprehensive data to vet suppliers and identify potential fraud risks.

3. Inventory visibility and transparency accelerates on time delivery and adaptation.

When the pandemic caused a shortage of supplies, the buyers’ biggest need from suppliers were inventory visibility and transparency into delivery timetables.  The solution was expected to provide real time visibility and transparency across the key supply chain pillars of procurement, manufacturing, transportation, and distribution. In the case of a pandemic, critical supply delivery lead time misinformation could lead to significant loss including lives.

RSC integrated IBM Sterling Supply Chain Suite to provide inventory visibility and deep insights into supply chain activities. Increased real-time visibility helped buyers to pace the PPE orders. The network also helped to identify existing supplies and excess inventory going unused, allowing hospitals to make it available to others and redirect supplies where they were needed most.

4. Simple solutions to solve pain points need to be swift to the market.

Blockchain solutions for supply chain can be very complex, supporting myriad use cases with a large consortium providing the single source of truth. One cannot build these solutions overnight when a pandemic hits. In order to be swift in the market, reuse solutions that are proven and available in the market being used by suppliers over the years.  The level of integrations can be daunting and can take years. RSC adopted agility against the features, made integrations simple and was quick to market to address the critical needs.

5. Trusted Digital Identities bridge the trust gap between reality and the digital world.

Blockchain-based digital identity played a major role in creating trust . Digital Identity is about linking real world identities and the digital world. Each physical object’s digital replica (known as a digital twin) is created in a way that prevents or reveals any human interference that alters information. For a digital business transaction on supply chain, it is substantially important to prove the authenticity of one’s own identity and to verify that of the transaction partner. RSC leveraged TYS’s Digital Identity services to issue verifiable credentials associated with a company identity, digitally signed, and thus verified by a trusted party.

Additional aspects of blockchain that also contributed to supply chain resiliency during the pandemic include data privacy, confidentiality of shared data, innovative business models that glue together stakeholders in the ecosystem, and third-party solution integrations that work on top of these ecosystems. With many blockchain supply chain solutions on the rise, and interoperability actively being addressed, our society will have quicker resilience when we encounter the next pandemic.

For more on this topic, tune into a discussion on “Leveraging blockchain to drive supply chain resilience and accountability in the face of climate change and other disruptions” at Open Source Summit Europe at 13:00 GMT, Monday, October 26. The panel will include Chainyard’s Gigo Joseph along with Douglas Johnson-Poensgen of Circulor and Marta Geater-Piekarska of Hyperledger.

More details are here.

Join the conversation about solutions and applications in the supply chain market with #HyperledgerSupplyChain this month on social channels.

Cover image by MTA New York City Transit / Marc A. Hermann, CC-BY-2.0