How blockchain can help cities to unlock supply chains

By Alessandro Zamboni, CEO of Supply@ME Capital and Stuart Nelson, Head of Enterprise Risk Management, Supply@ME Capital

Many manufacturing and trading companies, which have faced unprecedented supply chain challenges caused by the pandemic, will never go back to the old ways of how they produced and distributed goods and services. Nor should they.

The disruption caused by global supply chain shocks over the course of the past year cannot be underestimated. But COVID-19 has also brought forward technological advances in workflows and processes as businesses work out how to ensure they prevail in a post-pandemic world.

Like cities themselves, a study in October 2020 by Reuters and CalAmp of over 500 supply chain executives, found that 48 percent of shippers, and 57 percent of logistics companies accelerated their technological adoption and spend, as a result of the dislocation caused by COVID-19.

We have seen first-hand how cities have been affected by supply chain problems. Inventory has remained stockpiled in warehouses with the closure of non-essential shops. Companies – ranging from construction depots to high-street fashion – who were unable to fully move their operations online have experienced significant cashflow problems.

Inventory monitoring

With companies looking to release working capital, and so release pressure on their supply chains, we have seen an appetite in European cities, particularly in London and Milan, and also in MENA cities such as Dubai and Abu Dhabi from both producers and end-traders for ways to monetise their stock.

Traditionally suppliers have financed their purchase of goods by providing the latter as collateral to a lender. But with stock sitting in warehouses and factories unable to be processed, such trade finance has stalled. At Supply@ME Capital we have devised a solution based on blockchain whereby we can release funds to the company and take control of their stock in a digital ledger without having to physically acquire the materials. The company can then buy back the stock at cost with a fee payable to Supply@ME Capital when the supplier is in a position to proceed with manufacturing or sales.

By helping companies to raise working capital secured on their stock, cities can get their local economies working again and also unblock vital supply chains on which city services depend.

An increasing number of cities, ranging from Seoul to Delaware and Amsterdam to Dubai, are already using blockchain and the IoT to centralise their services and more effectively meet the needs of their citizens. Inventory monitoring through blockchain is an additional way to maximise operational efficiencies.