supply chain

All You Need to Know about Blockchain Having an Impact on Supply Chain

Managing a supply chain network is serious work, even when you’re running a small business. If you consider larger national and international companies, their supply chain isn’t much of a chain then. It is almost like a web, full of interconnectivity and riddled with inefficiency.

Supply chain management has become such a gigantic business that all sorts of specialists have started sprouting up whose only mission is to get rid of these inefficiencies and help businesses save their dollars.

Technologies such as Artificial Intelligence and Machine Learning are being applied to the challenge of optimizing the supply chain. And while all this is great, there is an all new tech solution around the block that is set to change the supply chain game.

It is, of course, blockchain—the tech that powers the infamous Bitcoin and other cryptocurrencies. It acts as an unhackable, decentralized ledger. Popularly described as a ‘record-keeping mechanism that makes it safer and easier for businesses to work with each other over the internet.’

This might give you an idea as to why blockchain has tremendous potential when it comes to supply chain management.

Boosting Compliance

It’s a fact that blockchain was initially designed keeping only financial transactions in mind. However, over time it was discovered that this is a highly versatile technology with all sorts of potential use cases. For example, when it comes to supply chain management, blockchain has the potential to help businesses to track the whats, the whys and the whens of every order they have on their supply chain.

This way, blockchain aims to help businesses to develop interoperable systems that allow them to get an accurate view of what’s happening beneath the bonnet of their company.

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If you look at blockchain, it is basically an incorruptible ledger which makes it a lot easier to track your compliance efforts by keeping a record of every single step along the way. At the same time, this blockchain data can be made easily available to third-parties such as compliance officers or to auditors.

It’s an open and transparent system that encourages people to work within the laws and regulations that are in place to protect consumers. It helps in controlling fraud and ensures that the only people who suffer are those who don’t abide by the rules.

The good news is that the shift toward blockchain is already starting to happen. For instance, Maersk and IBM have announced a partnership wherein they are all set to create a blockchain-based electronic shipping system which will allow companies to track their cargo in real-time. A move such as this is expected to save the global shipping industry billions of dollars every year.

How blockchain would work for the supply chain

Being an incorruptible digital ledger, blockchain is capable of storing records for every product. Every time a product changes hands, it gets added to its records.

Data such as who purchased it and for how much will also get recorded. Imagine a permanent record of every single product that begins from when it was created to when it was packed, shipped, displayed and finally sold.

The advantages to this are quite obvious. It would make the life of analysts significantly easy wherein they will be able to identify new ways to reduce delays and get rid of any human error, saving the business time and resources.

This data could be shared company-wide, allowing different departments to analyze it and work more closely together towards a common goal. A technology like Blockchain could fundamentally change the way you conduct business.

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There are multiple ways in which blockchain can help with supply chain management. From recording the transfer of assets to tracking receipts, purchase orders and paperwork associated with it.

Moreover, it could also store additional data such as whether the package needs to be handled with care or whether the fresh produce is organic or not.

The benefits of blockchain for the supply chain

One of the biggest benefits of blockchain is that it allows data to be much more interoperable. Companies could more easily share information with their suppliers, vendors, manufacturers, and couriers.

This increased transparency can significantly reduce delays and disputes, and it can prevent shipments from getting stuck in the middle of nowhere. Because how can you possibly lose a shipment if you can track it in real-time?

That’s not all—blockchain is also much more scalable. It offers an almost unlimited database that can be accessed from numerous touch-points all across the world. It provides a high level of security and the ability to be customized to adhere to more specialized applications.

The business even has the opportunity to create private blockchains to keep their data internal and to share it only with a selected group of people.

Still, private blockchains can only accomplish so much, and most of the value from blockchain technology comes from its ability to tie together multiple ledgers and data points to give one centralized bank of information. This can help fight fraud and other wrong issues.

According to Michael White, the former president of Maersk Line in North America, “One of the advantages of blockchain is the immutable record and trust people can have in it. If anything changes in a document, it’s immediately apparent to all.”

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Final thoughts

The blockchain is an up and coming technology and it is going to transform all sorts of industries— the supply chain being only one of them. And in many ways, it is inevitable.

There will come a point where industries will be forced to make a choice and the long-term benefits of blockchain will outweigh the short-term adaptation hassles. It’ll be the supply chain teams that are the fastest to react who will reap the maximum benefits including a boost in overall performance.

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