According to the latest report from the world economic forum (WEF), blockchain will help solve problems in global supply chains due to the coronavirus pandemic.
The health crisis due to the coronavirus pandemic has led to almost all industries being affected in one way or another and are now experiencing difficulties. Although the depth of the unfolding crisis may be unprecedented, the authors of the world economic forum report claim that blockchain is the key to mitigating the consequences of current problems.
Ziyang Fan, head of digital Commerce at WEF, and Rebecca Liao, co-founder and Executive Vice President of the SKUChain blockchain project, argue that the technology can provide transparency in supply chains, which is crucial both during normal production and during a crisis.
According to the authors of the report, until now, many global companies have delayed digitizing paper processes due to concerns that the cost of digitization will not justify the benefits. Therefore, logistics networks continue to rely heavily on physical signatures and printed documents, which require the personal presence of personnel at various sites to ensure the continuity of operations. One example is the sea waybill, a paper copy of which is still required by law.
These paper transactions reduce transparency and increase risk during periods of disruption, reducing firms ' ability to respond quickly to changing circumstances. The authors of the report claim that governments and firms with strong digital infrastructure, such as electronic signatures and support for electronic transactions, are already coping with the current crisis much better than those who do not have such tools.
However, the resistance to switching to digital technologies is not only related to costs, the report claims. Companies are allegedly concerned that transparency without reliable data privacy will compromise their commercial 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 can check their data exchange permissions directly on their own blockchain node. At the same time, their data can be safely distributed among other blockchain participants, without requiring two-way integration, which is necessary in centralized systems."
Given that data for the smooth functioning of value chains is extremely important, the report notes that funding programs have already appeared to monetize 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 paid for»:
"Buyers can, for example, use payment obligations on the blockchain as an alternative to a letter of credit, pay suppliers later, reduce the cost of goods sold, and protect themselves from the bankruptcy of suppliers. Suppliers, in turn, will quickly balance revenue and reduce the cost of financing supply chains."
This is not the first report of the WEF relating to the blockchain. Back in September 2018, the organization claimed that blockchain could increase trade Finance by $1 trillion, as well as help solve environmental problems.