Today’s supply chains are inherently complex- many lacking transparencies due to lack of interoperability and inconsistent or unavailable data — areas where blockchain can counter these inefficiencies and add new value.
The blockchain will not solve all the ills of the supply chain, but will definitely have answers to a majority of them. Also, if the innovators are able to combine blockchain with AI, smart contracts, and IOT-like technologies efficiently, all the ills of the supply chain management can be cured.
But despite all the knowledge and facts, the comprehensive blockchain-based SCM package is still not at its full potential and technical developments are underway and it will not be long before they are available.
Blockchain- an opportunity to capitalize on the modern supply chain network
Some supply chains are already using the technology, and experts suggest blockchain could become a universal “supply chain operating system” before long (Spend Matters). Consider how this technology could improve the following tasks:
- Recording the quantity and transfer of assets — like pallets, trailers, containers, etc. — as they move between supply chain nodes (Talking Logistics)
- Tracking purchase orders, change orders, receipts, shipment notifications, or other trade-related documents
- Assigning or verifying certifications or certain properties of physical products; for example determining if a food product is organic or fair trade (Provenance)
- Linking physical goods to serial numbers, bar codes, digital tags like RFID, etc.
- Sharing information about the manufacturing process, assembly, delivery, and maintenance of products with suppliers and vendors
Benefits of BlockChain in Nutshell
Every time a product changes hands, the transaction could be documented, creating a permanent history of a product, from manufacture to sale. This could dramatically reduce time delays, added costs, and human error that plague transactions today.
Blockchain has introduced its potential to bring out positive changes in many industries and businesses till date including the supply chain industry. In fact, the supply chain management is one of the most obvious and useful applications of Companies are exploring ways to filter the way their supply chains currently work and adopt the change that the Blockchain technology has to offer.
Once businesses see the bigger picture, they’ll eventually go through the hassle of applying newer systems embedded with blockchain in order to reap bigger benefits in the future. Dumping the paperwork and centralized databases will bring effective change in terms of higher rewards and increased performance among the supply chain teams.
This can be achieved if and only if the supply chain teams in place take notice of the latest technology trends in the blockchain space and find feasible ways to adopt the technology in their existing systems. The use of blockchain in supply chain management will work as a game-changer by eliminating the vulnerabilities and inefficiencies of the current system
Key Outcomes of Implementing BlockChain technologies: Provenance Tracking
Big companies and organizations have a lot of elements in their supply chains. Due to this, it becomes almost impossible to keep track of each and every record even for multinational corporations. The lack of transparency leads to cost and customer relations issues which ultimately dilutes the brand name.
In a blockchain-based supply chain management, record keeping and provenance tracking become easy as the product information can be accessed through the help of embedded sensors and RFID tags. The history of a product right from its origination to where it is in the present time can be traced through blockchain. Moreover, this type of accurate provenance tracking can be used to detect frauds in any part of the supply chain.
The real-time tracking of a product in a supply chain with the help of blockchain reduces the overall cost of moving items in a supply chain. According to a survey of supply chain workers conducted by APQC and the Digital Supply Chain Institute (DSCI), more than one-third of people cited the reduction of costs as the topmost benefit of the application of Blockchain in supply chain management.
When blockchain is applied to speed up administrative processes in supply chains, the extra costs occurring in the system are automatically reduced while still guaranteeing the security of transactions. The elimination of the middlemen and intermediaries in the supply chain saves the risks of frauds, product duplicacy and saves money too. Payments can be processed by customers and suppliers within the supply chain by using cryptocurrencies rather than customers and suppliers rather than relying on EDI. Moreover, efficiency will be improved and the risk of losing products will be reduced with accurate recordkeeping.
Having trust in complex supply chains with many participants is necessary for smooth operations. For example, when a manufacturer shares his products with suppliers, he/she should be able to depend on them for following factory safety standards. Also, when it comes to regulatory compliances such as custom enforcers, trust plays a vital role. The immutable nature of blockchain in the supply chain is well-designed to prevent tampering and establishing trust.
One of the most appealing benefits of using blockchain for data is that it allows the data to be more interoperable. Due to this, it becomes easier for companies to share information and data with manufacturers, suppliers, and vendors.
Transparency in Blockchain helps reduce delays and disputes while preventing goods from getting stuck in the supply chain. As each product can be tracked in real-time, the chances of misplacements are rare.
Blockchain offers scalability through which any large database is accessible from multiple locations from around the world. It also provides higher standards of security and the ability to customize according to the data feed. Moreover, blockchains can be created in a private manner too which will allow the data to be accessed explicitly between the parties who have permission for it.
The value of adopting blockchain technology can be taken from the fact that it has the potential to connect different ledgers and data points while maintaining the data integrity among multiple participants. The properties of transparency and immutability of blockchain technology make it useful for eliminating frauds in supply chain and maintaining the integrity of the system.
Other than these, few other benefits of adopting Blockchain technology in the supply chain industry are:
- Reduce or eliminate fraud and errors
- Improve inventory management
- Minimize courier costs
- Reduce delays from paperwork
- Identify issues faster
- Increase consumer and partner trust
Regardless of the application, blockchain offers business to capitalize on the following:
- Enhanced Transparency. Documenting a product’s journey across the supply chain reveals its true origin and touchpoints, which increases trust and helps eliminate the bias found in today’s opaque supply chains. Manufacturers can also reduce recalls by sharing logs with OEMs and regulators (Talking Logistics).
- Greater Scalability. Virtually any number of participants, accessing from any number of touchpoints, is possible (Forbes).
- Better Security. A shared, indelible ledger with codified rules could potentially eliminate the audits required by internal systems and processes (Spend Matters).
- Increased Innovation. Opportunities abound to create new, specialized uses for the technology as a result of the decentralized architecture.