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Let’s leverage block chain manufacturing to fight COVID-19
Context: Block chain and supply chain management
Block chain can be used to ensure quality assurance via tracking the supply chain for transportation and storage with minimal manual intervention. Block chain technology could offer a technological means for meeting the challenges arising in crisis like today’s and enabling potential steps for improvement of governance.
This brings us to the question of use of block chain and how it can increase business efficiencies and act as a transformative force in multiple aspects of government and private sector operations. In this article we will discuss the following:
- Why Supply Chain Management is important during pandemic like COVID-19?
- What is Block chain Technology?
- What is NITI Aayog’s Block chain: The Indian Strategy?
- What are the challenges in adopting Block chain technology?
Why Supply Chain Management is important during pandemic like COVID-19?
- Due to imposition of lockdown, several steps have been taken to place severe restrictions on economic activities excluding ‘essential services’.
- Providing essential services to the citizens during this period remains one of the major concerns of the government and their supply chains are critical for commodities such as food and medicine.
- There is a need to establish an oversight on the production, movement and availability of goods, besides ensuring authenticity, quality, and provenance during distribution.
- Shortages in supply of Personal Protective Equipment (PPE) and other critical medical equipment in India and abroad demonstrate the need for a robust supply chain management system.
- The Covid-19 Containment Plan released by the Ministry of Health and Family Welfare (MoHFW) states that for containing a cluster with a population of 100,000 for 1-2 months, there is a need of about 2,000,000 triple layer face masks; 200,000 gloves; 100,000 N-95 masks and 50,000 PPE kits. To meet such large demand of these essential goods, there is first a need to make the suppliers visible.
- Suppliers are reluctant to share information regarding sources and prices, for fear of losing their competitive advantage and misuse of data, hence their visibility and tracking becomes challenging.
- A large number of processes in supply chain management are still managed on paper, necessitating physical contact, which makes it costlier and more difficult to plan efficiently in present conditions.
- In times of crisis management of supply chain is equally important to governments as it is for businesses particularly for production and supply of essential equipment like test kits, PPEs, masks, etc.
What is Block chain?
- Block chains can be defined as a new type of network infrastructure (a way to organize how information and value moves around on the internet) that create ‘trust’ in networks by introducing distributed verifiability, auditability and consensus.
- Block chains create trust by acting as a shared database, distributed across vast peer-to-peer networks that have no single point of failure and no single source of truth, implying that no individual entity can own a block chain network, and no single entity can modify the data stored on it unilaterally without the consensus of its peers.
- New data can be added to a block chain only through agreement between the various nodes of the network, a mechanism known as distributed consensus. New data is added to the end and once added, it is permanent. Older data can neither be removed nor modified.
- Block chains leverage techniques from a field of mathematics and computer science, known as cryptography, to sign every transaction (e.g. the transfer of assets from one person to another) with a unique digital signature belonging to the user who initiated the transaction.
Characteristics of Block chain
What is NITI Aayog’s Block chain: The Indian Strategy?
- The leading policy think tank working for the government of India, Niti Aayog, has come out with a strategy document recognizing many crucial areas block chain technology can significantly benefit the country. The first part of the strategy is known as Blockchain: The India Strategy — Towards Enabling Ease of Business, Ease of Living and Ease of Governance.
- Governance in India faces unique challenges given the scale, diversity and complexity of processes involved for delivery of varied public services. Block chain offers unique possibilities of addressing issues relating to improving governance. In business, by allowing ‘self-regulation’.
- India can considerably move towards improving the ‘Ease of Doing Business’ by allowing entities to interact through a trusted medium with a reduced dependency on cumbersome regulatory oversight and compliance. By empowering citizens through features of transparency, decentralization and accountability, block chain would help in improving ease of living.
- NITI Aayog has pursued proof of concepts in four areas in an attempt to better understand the possible hurdles to implementing block chain technology. The pilot projects included a track and trace of drugs in the pharmaceutical supply chain, claims verification and approval in the disbursement of fertilizer subsidies, verification of university certificates, and a transfer of land records.
- In healthcare, block chain technology can be used to create a unified data system. The different partners like drug manufacturers, transporters and logistics service providers can come together for large scale coordination.
- A ‘private’ block chain could serve as a trusted common platform that would facilitate interaction between the large varieties of IT systems in a manner that maintains privacy through stakeholder specific accessibility controls.
- A block chain can serve as a potential source of data regarding overall supplier dependencies to enable strategies for risk mitigation. The block chain platform also lends itself to ensure quality assurance through tracking the supply chain and compliance with norms for transportation and storage (temperature, etc) with minimal manual intervention.
- On boarding various tiers of suppliers of various supply chains onto a common block chain platform would thus enable businesses and government to form a data driven view of their supply chains, and help minimize disruption caused by future disasters.
- Some of the major organizations exploring this approach are BMW, Tesla, Walmart, Nestle, and the Global Shipping Business Network (GSBN).
- The second part of the strategy, to be released in coming weeks, will focus on recommendations to establish India as a vibrant block chain ecosystem, including regulatory and policy considerations, creating a national infrastructure for policy solutions, and a procurement process for government agencies to adopt block chain technology.
What are the challenges in adopting Block chain technology?
Analysis of NITI Aayog’s pilots has led to the led to realization of a number of lessons in implementation of block chain, specifically in the Indian context. Some of the challenges are:
- Block chain’s ‘immutable’ nature necessitates the need to create a single source of truth before a process is put on block chain. This was evident in the creation of a prototype for the management of land transactions by NITI Aayog. The entity governing the recordkeeping of land records has to make sure that all instances of land records are dispute free.
- Block chains require that the asset being tracked be represented digitally. This requirement for a viable block chain use case often require changes in the traditional process before block chain can be deployed, which may cause the involved stakeholders to be reluctant to participate as they are not ready to give up traditional practices.
- Integration with existing and usually complex legacy systems will be a real challenge for large corporations. Therefore, most of the use cases so far have been limited to specific parts of businesses, as corporations figure out their block chain strategy. In the implementation of block chain for ‘track and trace’ of pharmaceutical drugs, for example, existing ERP or SCM (Supply Chain Management) needed to be integrated with the block chain platform for a unified view of drugs as they moved through the supply chain.
Block chain is still in its nascent stage in India. Some of the steps to use block chain at wide level can includes, shared ownership model that allays fears of centralization across supply chain stakeholders. Clear incentives must be created to ensure the participation of multiple tiers of suppliers so as to make the initiative a success, with special care taken to ensure that businesses trust the system. These steps are premature in the ongoing crisis but they can be worked upon after the pandemic to avoid similar situations in the future.
NITI Aayog in the first part of the two-part Strategy document has focused on the application of block chain to resolve business and governance process inefficiencies. The second part of the Strategy will focus on recommendations to establish India as a vibrant block chain ecosystem. Taking steps to increase domestic supply chain visibility may also be critical for improving the attractiveness of India as a potential alternative manufacturing hub.