By Sherree DeCovny, Co-founder and Research Principal, Chain Business Insights, LLC
Participants on a blockchain have a copy of a transaction ledger mutually agreed upon by consensus. Blockchains typically support smart contracts, pieces of computer code that automatically perform business functions such as verifying and executing the terms of a supplier contract. On a blockchain, smart contracts simulate a trusted third party and enable trusted relationships to be created between various parties.
In a supply chain context, external changes could affect the terms of a contract such as the failure of a refrigeration system that ruins a shipment. To this end, smart contracts could possibly incorporate external data inputs from the IoT such as light, pressure, humidity, shock, temperature and other variables.
Three criteria can help you begin to evaluate whether it makes sense to use smart contracts in your supply chain:
So let’s say you decide to automate through the use of smart contracts. How do you work with technologists to turn a physical paper contract into a smart contract?