The implementation of lockdown orders around the world due to the spread of the COVID-19 pandemic has led to uncertainty around the long-term effect that the virus will have on the United States as well as the global economy. In the face of such challenges, companies are searching for solutions that will solve their immediate problems and level the potentially long-term impact that this pandemic will have on their businesses. A growing number of companies in the public and private sectors are beginning to explore the possible application of distributed ledger technology beyond the world of digital currencies to address the newfound logistical issues that they are facing as a result of the COVID-19 pandemic.
What is Blockchain Technology?
Blockchain technology, a type of distributed ledger system, synchronizes data from independent devices that are spread across multiple geographic locations into a shared digital database. Blockchain technology processes data as a chronological series of “blocks” of information that cannot be altered. This provides users with a complete and reliable historical record of information. Given the decentralized nature of this technology, companies that have already implemented a form of blockchain technology in their businesses typically use it to process transactions without the need for a third-party’s involvement. Due to the COVID-19 pandemic, implementing new forms of technology, like blockchain, could be a key differentiator in building efficiency for companies to help cut costs and provide capital that can be used elsewhere. The most pressing example of how blockchain technology can help companies deal with the COVID-19 pandemic are within the food & beverage industry as well as healthcare.
Blockchain in the Food and Beverage Industry
COVID-19 has caused a shift in consumer spending for the food and beverage industry where consumers are spending more money on groceries as opposed to making purchases at restaurants, cafés, and other public dining locations. This demand has placed significant pressure across the food supply chain from farmers to retailers, to maintain consistent production and delivery of goods despite reduced labor. Impediments to accomplishing this include health concerns for their employees, the need to alter product mixes to suit home consumption, and disruptions in the availability and capacity of distributors. In addition, new cases of COVID-19 continue to emerge, the health and safety concerns of consumers only continue to rise.
With an even greater demand for transparency, companies are recognizing the importance of understanding and evaluating their supply chains. Those who have taken the steps towards accomplishing this are coming to a similar solution: blockchain technology. In order to fully understand one’s supply chain, one must be able to follow it from start to finish. Implementing blockchain technology enhances the mechanics of tracking a good from its creation to the end-consumer in real-time. Systems that are currently in place are often regarded as antiquated, slow, and paper-based. Harnessing blockchain’s ability to efficiently identify product information enables companies to make decisions that will improve product safety, reduce operational costs, anticipate inventory demand, and minimize waste through efficient procurement. In addition, companies have the option to communicate these best practices to the public as a means of building consumer trust if they so desire. The immutable nature of blockchain technology lends itself to the trustworthiness of the information that is shared by companies that use it and will serve to satisfy consumer demand for increased transparency.
Producers, suppliers, manufacturers, and retailers alike are reaping the above-mentioned benefits that blockchain can provide to their supply chain management processes with the help of blockchain solutions. For example, IBM recently announced that it is assisting JM Smucker, a leading manufacturer of packaged goods, with the tracing of its one-hundred percent single-source Colombian coffee through the IBM Food Trust blockchain solution. This supply chain information will become viewable by consumers through quick response (“QR”) codes on the product’s packaging with just a single tap of the consumer’s cell phone. If more blockchain companies continue to make partnerships such as these, the community as a whole will see an increase in business opportunities as the food and beverage industry continues to strive for the trust of their consumers.
contact a member of Withum’s Digital Currency and Blockchain Technology Group.
Blockchain in the World of Medicine
The staggering and ever-increasing number of positive COVID-19 cases in the United States caused a nationwide shortage of medical devices and equipment, such as ventilators and surgical masks. The concern that those in need may not have access to the necessary treatments has led healthcare professionals to consider the possibility that implementing blockchain technology could help mitigate this problem from occurring again in the future. The distributed ledger system would make it possible for healthcare providers to track the shipping and count of supplies in real-time. This could help to ensure that not only is there a sufficient amount of supplies, but that they are properly sourced and distributed to avoid the misplacement of inventory.
A blockchain solution, Rapid Supplier Connect, launched by IBM in response to the recent medical supply shortage was able to accomplish all of the above by quickly and effectively onboarding and connecting vetted suppliers with qualified buyers. By identifying non-traditional suppliers through this project, healthcare providers were able to purchase trustworthy supplies and provide proper care to their patients in a timely manner.
Another top priority during this pandemic is reducing the number of cases that arise. More public and private entities within the healthcare industry believe that the availability of trusted data could accelerate the accomplishment of this goal. A blockchain project, MiPasa, that has assisted with this was launched by the World Health Organization to provide tamper-proof data and analytics tools that can be used to monitor health trends and forecast outbreaks. The platform has the support of large technology companies like Oracle, Microsoft, and IBM, as well as the contribution of data from national health institutions such as the United States Center of Disease Control. With the increased interest in distributed ledger technology and collaboration among government agencies, blockchain technology solution providers, and private organizations it is foreseeable that platforms such as these will continue to be used in the future for disease prevention and control.
The Benefits of Blockchain
COVID-19 has brought with it a great amount of uncertainty. During this time, many have taken a step back to reflect on the current situation and to brainstorm new ways through which aspects of their business can be improved. Companies, specifically within the food & beverage industry as well as the healthcare industry, are recognizing that these blockchain solutions have the capable tools needed to increase efficiency and transparency, reduce costs, minimize waste, and improve safety and quality across a variety of product and service types. While it is tough to measure the immediate impact that blockchain technology has had thus far on these respective industries, the public interest and potential long-term effect as a result of COVID-19 could help provide a positive lasting outcome for businesses.
Digital Currency and Blockchain Technology
- Goetz, S.J., Schmidt, C. Chase, L., Kolodinksy, J. “Americans’ Food Spending Patterns Explain Devastating Impact of COVID-19 Lockdowns on Agriculture.” Journal of Agriculture, Food Systems and Community Development, no. 2020-9, 2020, https://aese.psu.edu/nercrd/publications/covid-19-issues-briefs/food-spending-patterns-explain-covid-19-impact-on-agriculture. Accessed September 4, 2020.
- Biscotti, Louis. “Blockchain Accelerates Amid Covid-19 Pandemic.” Forbes, Forbes Magazine, 18 Aug. 2020, www.forbes.com/sites/louisbiscotti/2020/08/18/blockchain-accelerates-amid-covid-19-pandemic/. Accessed September 4, 2020.
- Anzalone, Robert. “IBM’s Blockchain Will Support The MiPasa COVID-19 Data Project.” Forbes, Forbes Magazine, 28 Mar. 2020, https://www.forbes.com/sites/robertanzalone/2020/03/28/ibms-blockchain-will-support-the-mipasa-covid-19-data-project/#1456deb1474f. Accessed October 2, 2020.