To cope with the industrial revolution, new technologies appear every day. One of the technologies is blockchain technology. The technology has great potential to increase the efficiency and profitability of managing today’s supply chain. Due to the complexity and lack of transparency in our current supply chains, there is interest in how blockchains might transform the supply chain and logistics industry. The technology is an Internet-based and can publicly record, distribute and verify transactions in encrypted, immutable books.
How is the supply chain broken?
The supply chain is the heart of every business operation. To have proper transparency and to make the best decisions, supply chain leaders need access to real-time data about their supply chain. But, as per the current scenario, our supply chain management is broken in several ways. Over a hundred years ago, supply chains were relatively simple because commerce was local, but they have grown incredibly complex as of now. Throughout the history of supply chains, there have been innovations such as the shift to haul freight via trucks rather than rail or the emergence of personal computers in the 1980s that led to dramatic shifts in supply chain management. Since manufacturing has been globalized, and a large portion of it is done in China, our supply chains are heavy with their complexity. It’s incredibly difficult to truly know the value of products because of the significant lack of transparency in the current system. Similarly, it’s extremely difficult to investigate supply chains when there is suspicion of illegal or unethical practices. They can also be highly inefficient as vendors and suppliers try to connect the dots on who needs what, when and how.
If the management is not good, the supply chain will face friction. The main reason for this friction is that there are many middlemen in the process, and manual data input is not very reliable. If this uncertainty increases, it may cause the supply chain to stop completely. There should be a smooth conversation between the customer, provider, and supplier through a centralized third-party entity that will help resolve the issues encountered in the query.
How blockchain is helping supply chain
Blockchain is mainly used for Bitcoin, a digital cryptocurrency that is independent of the central bank. It provides a platform to create and distribute books, or to record all transactions using Bitcoin, covering all corners of the globe. It provides information about the time, date and amount of payment. However, since the reputation of Bitcoin is paid anonymously, information about the identity of the participating parties is concealed. Since every transaction is recorded in a block and across multiple copies of the ledger that are distributed over many nodes computers, it is highly transparent concerning the current scenario. Ultimately, blockchain can increase the efficiency and transparency of supply chains and positively impact everything from warehouses to delivery to payment. Chain of command is essential for many things, and blockchain has the chain of command built-in. Everyone on the blockchain can see the chain of ownership of an asset on the blockchain. Records on the blockchain cannot be erased, which is important for a transparent supply chain.
Examples of blockchain in supply chain
Meat traceability - Companies can use distributed ledgers to document the status of products at each stage of production. Since these records will be uploaded to the blockchain, they will be immutable and permanent. In this way, organizations can track the root cause of any problems encountered during production. Global retailer Walmart uses blockchain to track sales of meat in China. Its system lets the company see where each piece of meat comes from, each processing and storage step in the supply chain, and the products’ sell-by date.
Car supplier payment - An organization can easily transfer its funds by integrating its systems into the blockchain. This makes the bank transaction model between traditional payers and payees useless. The company can make payments and various transactions quickly and securely.
Cold chain monitoring - Enterprises such as medicine and food need to optimize their warehousing systems. They need to control their distribution and sharing, not to control each warehouse. Sensors can monitor sensitive products by recording vibration, humidity, temperature, and other environmental conditions. Readings from the sensor can later be stored in the blockchain. If the sensor's reading deviates from the favorable conditions of the cargo, intelligent controls can be set to correct this situation.
In short, any company or organization can change supply chains, ecosystems, and industries by implementing blockchains. This technology can help eliminate the manual waste generated by managing paperwork and expensive logistics delays. Since the advantages of the blockchain supply chain outweigh the disadvantages, many companies have invested in the blockchain supply chain market.