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PA OPINION

Transforming humanitarian aid and supply chains with blockchain

The people of Sierra Leone won’t forget 14 August 2017. The region around the capital of the West African country, Freetown, had been bombarded by heavy rain for three days, causing huge mudslides. More than 1,100 people died and many thousands were left homeless in a disaster that prompted a huge influx of international assistance.

The UK’s Department for International Development (DFID) gave a £5 million package to support non-governmental organisations providing essentials such as clean water, medicines, clothing and bedding to thousands of people.

One of the challenges DFID faces in such emergencies is ensuring the aid it supplies to humanitarian groups reaches those who need it quickly and efficiently. But the long supply lines and sheer number of partner agencies involved can make it difficult to trace what has happened to products in the chain.

We’ve been working with DFID to explore how 21st century technologies can make such supply chains more transparent, eventually settling on blockchain for a pilot project. It’s a time of massive change for all kinds of organisation, and the humanitarian sector isn’t alone in experimenting with innovative technologies to improve supply chain efficiencies. We can replicate the lessons learnt here across industries.

The hype around blockchain is huge, but we didn’t go into the process thinking it would be our technology of choice. We worked through a design-thinking process with various stakeholders within DFID to find a solution that offered the right mix of accessibility, scalability, security and regulatory compliance.

Blockchain offers transparency

Humanitarian agencies already use blockchain. One example is the Building Blocks pilot developed by the World Food Programme - trialling blockchain as a means of making cash transfers more efficient, transparent and secure. However, the focus of our work has been on rapid-response scenarios, such as emergencies like hurricanes and earthquakes, where efficient supply chains are crucial.

While blockchain is often linked to cryptocurrencies such as Bitcoin, in our case it’s probably best thought of as a secure way of recording the histories of transactions in a supply chain. In simple terms, it’s a database that all those involved in the making, handling and distribution of goods in the supply process continuously update. The blockchain time stamps and securely encrypts each transaction, creating a transparent sequence of traceable events showing what happened to the supplies at each stage of the process.

To work towards a workable technological solution, we first needed to identify the challenges facing those providing and delivering aid. Working with DFID, we analysed the logistics and listened to experienced people in the supply chain team to understand current pain points and opportunities for improvement.

Following this process let us develop a comprehensive list of challenges that we matched to the potential benefits of different technologies. Some of the most critical issues included:

  • a lack of end-to-end visibility
    Following a disaster, agencies often come together in an ad-hoc manner to form supply chains. It’s difficult for each to build a complete picture of where supplies are and how long it will take to deliver them, and how to make efficiencies and share supplies.
  • high logistics costs
    Procurement and logistics often form a large part of the bill. Supply chain participants often duplicate effort, updating their individual records for the same transaction.
  • a need for more accurate information
    A lack of real-time information about stocks of supplies throughout the chain can hamper aid responses. This impacts trust in the data and leads to time-consuming double-checking.
  • the risk of corruption and fraud
    Limited supply chain transparency makes corruption and fraud easier, further disrupting the delivery of urgent aid.

Once armed with this list, we found blockchain had great potential for pilot studies, so we examined how it could help. Key benefits could include:

  • improved operational readiness
    Blockchain can allow real-time status tracking of supplies. When used with data analytics, the technology could monitor current, and predict future, supply demands to ensure delivery while keeping inventories at minimum levels.
  • greater transparency
    The technology would provide accurate status reports on the provenance, use-by-dates, location and transfer of products. It’s simple to see who has goods at any time. Each agency can update a shipment’s status while everyone in the chain can check or verify what’s happening to it without using middle-men.
  • provide greater accountability
    A blockchain network would give controlled access to information, allowing different permissions for those accessing supply chain data if needed. It also removes the need for separate reconciliation procedures among different participants that demand verification. This greater visibility reduces opportunities for fraud and theft.
  • reduce administrative costs and save time
    Blockchain could let smart contracts (think of this as If-statements) automatically complete at the necessary stages within the supply chain. This could reduce costs, save time and minimise the risk of disputes.

Moving from storyboard to pilot project

Having developed robust insights, we used real rapid-response scenarios as examples in workshops with DFID to discuss how blockchain might have helped in past incidents. Thanks to these insights, DFID now understands how it can create a more holistic view of what happens to humanitarian aid.

This knowledge let us develop an ideas storyboard to display blockchain’s strengths and its feasibility in a small-scale pilot project, which we’ll help develop. Our next step is to help DFID explore blockchain for a part of the supply chain. It must cover an area where the regulatory complexity is relatively small, there aren’t too many users or tasks, and there’s potential to scale quickly.

The pilot will help those involved learn about the benefits of blockchain in supply chains and fix systemic shortcomings without hampering sensitive day-to-day operations. By doing so, they could reap the rewards of blockchain across the whole supply chain.

Work with blockchain won’t stop at supply chains – it has practical uses throughout industries as the database for the networked society. You just need to leave your assumptions behind to get started.

Contact AI and automation team

Søren Knudsen

Søren Knudsen

Mark Griep

Mark Griep

Andrew Jaminson

Andrew Jaminson

Katharine Henley

Katharine Henley

Lee Howells

Lee Howells

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