How Blockchain Can Solve Today's Medical Supply Chain Flaws And Improve Responses For Future Crises

Article written by Steve McNew



Right now, the world is reeling from one of the most dangerous and widespread pandemics in modern history. Our health, work and lives have been disrupted in countless ways, and healthcare systems are facing the ultimate test. People and businesses are rallying to care for the sick, support their communities and keep society moving forward.

In parallel with the inspiring human response we’ve seen in recent weeks, widespread medical supply shortages (paywall) and worries over the availability of certain equipment, tests and medications are top of mind. We’re seeing the very best of American industry — from people sewing homemade masks (paywall) to car manufacturers adjusting their factory lines to boost rapid ventilator production — in response to these challenges. Still, crises like these reveal shortcomings in certain processes across industries. The need for better healthcare and pharmaceutical supply chain management and tracking has come into a glaring spotlight for me.

Once the dust settles on this situation, U.S. government and industry will need to take a close look at why we faced these shortages and the barriers that made it so difficult to track the volumes and locations of essential supplies. Then, it will be time to get to work on transforming processes and determining what can be done to fill any current gaps in our infrastructure and supply chains.

As a senior managing director at a company that offers blockchain advisory services, I believe blockchain technology is uniquely and perfectly suited to address these problems. Given the readiness and cost-effectiveness of blockchain-based solutions, it will be easier than ever before for companies to leverage this technology in a meaningful way. Where today, most medical and pharma supply chains face extensive logistical challenges — which can include a lack of visibility into real-time shipment locations, uncertainty about weather and other transport interferences, product quality tracking and verification, customs reporting across borders, and complicated invoicing and payments — a blockchain-enabled supply chain could immutably, transparently and efficiently track every step for every item.

Research led by Timothy Mackey, a professor at the University of California San Diego, supports this idea. He has been studying how distributed ledger technology can be applied to medical supply chains. A Forbes article on Mackey’s efforts stated, “By opening up the records to increased scrutiny, he came to believe that international health officials could more easily identify ‘choke points’ in medical supply chains, and anticipate shortages based on outbreak locations.” Mackey also said two blockchain platforms that secure the medical supply chain “could eventually help more quickly identify when a region is running low on treatment supplies, shining a light on its preparedness for pandemics.”

The immutability of a distributed ledger system provides information transparency, proof, accuracy and reduced risk for all parties involved. Imagine if at the height of the novel coronavirus pandemic in the U.S., we had a traceable and secure view of our country’s critical medical supply inventory. Consider how lightened the burden on healthcare providers would be if they knew how many masks, gloves, test kits and ventilators were available in real time for any given location and where they were along the shipping route from facility to hospital. Likewise, as COVID-19 medications and vaccinations come to bear, a blockchain system to securely track and prove the ingredients, production, volumes, quality and availability could greatly improve distribution and quality control. Moreover, the immutability of the data from such a system could help combat public panic and enable fact-based information sharing.

Blockchain technology could also provide infrastructure for managing the transportation side — including rail, trucking, airplanes and ships — of critical supply chains. Tracing origination and endpoints becomes almost instantaneous on a blockchain, which could reduce the time of unnecessary exposure and legal risk. Blockchain technology can address all variables — vehicle maintenance, logistics and overall system management — that impact shipments so they can run smoothly.

The good news in all of this is that blockchain is no longer a nebulous concept. Ready-to-launch solutions and methodologies that meet specific use cases in supply chains are already in use. A large U.S. retailer has deployed a blockchain solution to manage food safety tracking in its grocery supply chain. According to an article on the project, “The firm has the ability to trace the origins of over 25 products from five different suppliers.” An auto manufacturer is using blockchain to track and trace components and raw materials it uses in its production. My firm also worked with one client in the oil and gas industry to deploy a blockchain system that tracks the transport of crude oil across borders and automates processes.

A distributed ledger database can track every important piece of information along a supply chain and log it in a way that allows participation of numerous parties without compromising security. Connected sensors could actively measure and report a wide range of specified details about a product and transfer that information to the blockchain at set frequencies. Smart contracts could enable tracking, monitoring and transacting of important information and steps.

Once an organization is ready to move forward on a project like this, one of the first challenges will likely be obtaining stakeholder buy-in. All too often, project sponsors lead with what blockchain is and how great it is, which can be overwhelming. Instead of starting with blockchain as a technology, focus first on the issues it will solve and the anticipated results.

Connectivity with legacy systems is another challenge. During strategic planning, teams should take time to understand current workflows and technologies. This will surface the specific systems that a blockchain solution will interact with, and what type of technology and custom solutions you’ll need to enable connectivity between them.

I believe this pandemic has exposed weaknesses in the manufacture and distribution of critical goods and issues that can arise when countries are heavily reliant on foreign supply. Not long ago there were no solutions for comprehensively accounting for and tracking goods and services. But we are now approaching a turning point wherein we have the technology needed to overhaul processes. This could help us make production of and access to medicine and critical supplies faster, more transparent and more secure for a healthier future.

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