Perspectives

Blockchain's Promise for Defense Agency Supply Chains

Written by Larkin Young and Jaimin Desai

Making supply chain networks more secure and efficient

Blockchain technology has the potential to solve some of government’s most difficult problems. One promising area is the Department of Defense’s (DOD) supply chain network—one of the largest and most complex in the world, with thousands of supply chain partners across the globe. 

Capabilities
Blockchain 101
Blockchain 101
Blockchain 101

Blockchain has enormous potential in business and government. What are its key features? Read More

Capabilities

Among the challenges that blockchain can address for defense organizations:

  • There’s no “single source of truth” for supply chain data among DOD organizations and their partners. Many entities manage their own records. This fragmentation of the data leads to a significant amount of error in tracking and routing, making it difficult for defense organizations to optimize their supply chain processes by reducing costs, shortening times to delivery, and managing inventory.
  • Defense organizations have limited visibility into the data. This makes it difficult for them to track goods end-to-end through the supply chain. And it often leads to confusion and miscommunication among the various supply chain participants—resulting in DOD organizations receiving wrong parts or wrong quantities, or finding that shipments have been lost or misdelivered.
  • The lack of transparency in the data causes a lack of trust between vendors, carriers, shippers, and other supply chain partners. This often leads to a significant shortfall or oversupply of goods. For example, DOD requisitions officers often order more of an item than they need, because they expect only a portion to be correctly delivered. It is difficult for defense organizations to determine the amount and availability of the resources they need to maintain military readiness.

The Power of Blockchain

Blockchain technology can address these problems by providing a single source of truth—a shared, secure, and immutable record of DOD supply chain transactions.

Among the key features:

  • Goods moving through the supply chain can be scanned at each step, with the manufacturer, shippers, carriers, and other intermediaries updating the supply chain blockchain. This information gives DOD logistics teams the visibility into the data they need to accurately track goods and identify problems in real time.
  •  When a supply chain partner adds a record to the blockchain, it digitally signs the data using its private “key”—a secret code—identifying who made the update. Once the data is added, it cannot be tampered with.
  •  Blockchain’s distributed architecture pairs well with Internet of Things (IoT) devices, helping to increase supply chain data accuracy. For example, a shipping container can be outfitted with IoT sensors that automatically update the blockchain with information about the container’s contents, even including data such as temperature and humidity.
  •  Unlike the public nature of the Bitcoin blockchain, where anyone can view transactions, a defense supply chain blockchain is accessible only to supply chain partners. Furthermore, sensitive details such as geographic information, type of goods, and origin and destination, can be encrypted and made visible only to relevant parties.
  • Because of the increased accuracy, completeness, and transparency of supply chain data on the blockchain, DOD organizations can properly account for the movement of goods, and can forecast inventories with a high degree of confidence—reducing inefficiencies and waste.

Blockchain has the potential to significantly transform DOD supply chain networks. And defense organizations don’t have to wait for a full transformation to get started. With the right expertise, they can pilot blockchain-based solutions in parts of their operations and begin to realize the many potential benefits of blockchain technology.

Tags

Innovation Solutions Blockchain Civil Government Defense Digital Solutions

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