Blockchain technology has the potential to disrupt many industries and major companies around the globe.
While many commentators focus on the impact to the banking community, there's potentially even greater impact to be made in traditional industries that have been revolutionised once already by changes in supply chain management over the last 20 years.
The problem
A single company (such as a healthcare or beauty conglomerate) may have hundreds of thousands of products that have to be manufactured, quality controlled, packed, shipped, delivered and unpacked before a customer has the ability to make a purchase.
These processes are currently managed by many complex, and potentially fragmented or out of date software systems that can make tracking the effectiveness and status of each process difficult or impossible.
An Example
If we use one of the most simple examples of delivering a pallet of goods from Australia to the US as a case study, we can see how effective use of blockchain technology could improve visibility of the system.
Step 1: Production
Step 2: Packaging
Step 3: Transport
Step 4: Deliver to point of sale
Step 5: Sale
In this process, there could be as few as one, and as many as 10 or 12 different companies involved over many countries and continents. Each of these companies and the end user have no visibility of the rest of the process so they can't answer if the goods they're transporting are authentic, who they've been handled by, and potentially if they've come into contact with certain companies or geographies.
The Solution
Blockchain technology is a distributed ledger that ensures both transparency and security. The best analogy I've seen is to imagine that you could open your wallet, pick out a $5 note and be able to check online to see each person and company that the particular note has been touched by since it was created at the mint.
Using a blockchain for a supply chain process could allow each company to efficiently complete their part of the process, and record a timestamp plus other relevant information for others in the process to validate and verify.
Imagine how useful this could be for companies that struggle with counterfeiting, or for transporting goods overseas using multiple shipping companies. It can be a centralised data source for each company.
Which ASX Companies are in trouble?
I'd suggest that ASX companies like Qube Holdings Ltd (ASX: QUB), Brambles Limited (ASX: BXB), Tox Free Solutions Limited (ASX: TOX) and Lindsay Australia Limited (ASX: LAU) are in the box seat to incorporate more technology into their systems, but they need to watch out for overseas owned companies like Recall and Toll that could be advanced in this already.
Identifying the risks of any investment is incredibly important, so I would suggest checking out how the blockchain and other emerging technologies could impact your investments!