Supply Chain success story using Blockchain

At Telefónica’s global Supply Chain area, we’ve always relied on technology to improve our processes and launch new projects. And that’s exactly what happened back in 2018, when we began to understand the advantages that Blockchain technology could bring us.

What path did we choose? We had an operation in need of transformation and greater efficiency. With the Equipment we install at the customer’s home (router, set-top box, modem, …), there was clear room for improvement—particularly in achieving **end-to-end traceability at the unit level** throughout the entire lifecycle. In other words, being able to manage each device individually from the moment it’s manufactured to when it’s installed in a household. That’s how we kicked off a comprehensive process mapping effort. We wanted to understand what was being done and how it was being done until that point, facing two key challenges:

• Reducing Lead Time (the time it took for a device to reach our warehouses after placing a purchase order)
• Increasing stock visibility.

Thinking out of the box and executing Agile

There were several technological options available, but the one best suited to transforming these processes was Blockchain. We’re fortunate to work at a technology company that constantly pushes and challenges us to think out of the box when it comes to new technologies and their use cases. So we designed a Proof of Concept (PoC), which we executed in just 4 weeks. The results were so compelling that the direction was clear: we had to keep moving forward.

But results alone weren’t enough to win internal buy-in. We needed to crunch the numbers and prove we could achieve a return on investment in under a year. With that goal in mind—and the support of multiple teams across the company—we launched the project under an Agile methodology. This Fail Fast culture (errors are corrected continuously) enabled us to see results in about 4 months.

To give you a sense of the scale: Telefónica moves around **18 million boxes** of this type of equipment every year. Each device consists of more than 1,000 components. We aim to record every piece of information—from the components used in manufacturing to final installation at the customer’s home. We also want to track every warehouse it passes through, every partner company involved, the technicians who perform the installations, and any returns or repairs. This way, we’ll always have access to the **complete lifecycle history** of each device.

What can we do with the data we collect?

But traceability isn’t an end in itself. It gives us better control over the equipment and allows us to uncover insights such as:

• If a batch from a manufacturer has a defect, we can issue an alert across the entire chain to prevent use of those “damaged” units
• How many times a device has been installed
• If it has been repaired, where and which components failed
• Whether technicians from partner companies are using the materials correctly (first-in, first-out)
• If components originate from “unauthorized” sources (non-certified factories or those with poor practices)

With that information, we can:

• Optimize inventory levels, which leads to a critical benefit: **cost optimization**
• Ensure proper handling of our equipment across all stakeholders in the chain
• Identify and alert about issues we didn’t even know were happening
• Anticipate customer problems and offer proactive solutions
• Be more sustainable by improving the usage of the materials we purchase

All of this is made possible thanks to the **collaborative consensus of every stakeholder in the chain**. Each contributes information to the lifecycle of a device and uses it to optimize their own operations. All with the **security, transparency and reliability** that Blockchain technology provides. It would have been nearly impossible to achieve through other means.

This project began with our operations in Brazil and we’ve already completed the process mapping for Spain. The ambition is to extend it to all operations and beyond customer equipment—to include even the Group’s Network infrastructure. And this is just the beginning: we’re already exploring the potential to tokenize, implement smart contracts, and automate payments...