Introduction
Technologies are building pathways that will help their users reach an easier solution to the problems they face. Better, the advancements in the technology world are pushing the way solutions to problems are becoming much smoother. Talking about technologies, the most talked about technological advancement in recent times is the blockchain technology; best known for its application across the world of crypto.
Blockchain technology and its unique ability to store, share and distribute data have taken the world by storm! Not only does its application has been the stepping stone for the crypto space but also sectors like healthcare and supply chain has benefitted a lot out of the solutions that blockchain technology caters to.
Creating a wholesome, transparent, tamperproof history of the information data, inventory flows, and financial flows in transactions are some of the applications that blockchain has been able to cater to, when it comes to supply chain and its roots in blockchain technology. However, before we take a plunge into blockchain in supply chain management, let us take a quick scan of what the supply chain is and what are the challenges faced by the sector.
What is Supply Chain?
The meaning of Supply chain management is very similar to what the term stands for. It is the management of the flow of goods and services which also includes all processes that transform raw materials into final products. The supply chain also involves the active facilitating of a business’s supply-side activities in order to maximize customer value and gain a competitive advantage in the marketplace.
Challenges Faced By The Supply Chain Management
Taking into account the basic usage of the supply chain workings, it is evident that the supply chain sector has a lot of work that deals with data and information that needs authentication audits. Thus, two of the most important challenges that persists in today’s supply chain sector are as follows;
- Visibility; which includes identifying and collecting data from all links existing in the supply chain
- Disclosure of the date and communications that exist with accurate details.
Read more: Blockchain in Healthcare Industry
Benefits of Blockchain in Supply Chain Management
Now that the major problem statement is stated, there need to be certain benefits as to why blockchain will be the technology that the supply chain takes up to ease its processes and cater to a smoother process for everyone involved. Here are some of the benefits that blockchain provides to the supply chain;
- Traceability of the objects in the supply chain to ensure corporate standards are met
- Decrease in the losses from fraudulent trading
- Improve visibility and compliance over outsourced contract manufacturing
- Less paperwork and administrative expenses
- Strong corporate reputation due to the ability to provide transparency of the materials used in various products
- Increase in creditability and trust as the data shared is end-to-end authentic
- The availability of the vast amount of data also results in engaging the stakeholders
Why do we need Blockchain in Supply Chain Management?
Besides the usage of blockchain in the crypto space, blockchain in supply chain management also holds a huge amount of capable solutions. One of the ways in which the new technology can greatly improve supply chains is by enabling faster and more cost-efficient delivery of products! The workings of blockchain technology can also be used to enhance the traceability of products, enhance the coordination between the partners involved along with aiding access to financing.
Using this powerful technology, parties collaborating within one shared platform can also help in reducing the delays dramatically along with added costs while negating the possibility of human error that is frequently associated with transactions. This deduction of mediators in the supply chain also reduces the risks of any fraudulent activity. In case a fraud occurs, the comprehensive records which is possible due to the implementation of blockchain technology can enable organizations to pinpoint their source!
Top 5 Use cases of blockchain in Supply Chain Management
| Supply Chain Finance | Blockchain can be used to up the efficiency of invoice processing while providing transparent and secure transactions. Along with that blockchain can also help in increasing the speed of invoice processing. |
| Supply Chain Logistics | Using blockchain in supply chain logistics can be used in verifying transactions, without any involvement of third parties; thus, negating an entire layer of complexity from global supply chains. |
| Supplier Payments | Increase in speed with which payments can be processed due to the elimination of any third party involvement. |
| Cold Chain Traceability | Storage of food and pharmaceutical materials has similar requirements. Using blockchain to track the humidity, vibration and other environmental data can help in the smooth processing of the deliveries. |
| Food Safety | The record of all the steps involved right from the manufacture of the product to how it was taken care of till it reaches the end party is the major solution that blockchain in supply chain brings to the table. |
Top 5 Supply Chain Companies Applying Blockchain
With so much on the table that blockchain has to offer, many organizations have taken up the opportunity to better their ways. Some of the use cases listed below show the impact that blockchain technology already has within the global supply chains:
- PepsiCo implemented a blockchain pilot known as Project Proton. It included elements of the company’s programmatic ads of the supply chain to automate through the usage of smart contracts. Project Proton used these contracts to gather ad impressions from various data sources, facilitated payments using digital tokens in real-time, and resulted in a 28% increase in efficiency.
- Tomcar, an Australian car manufacturer, has made use of the infamous Bitcoin to pay some of its suppliers. They also accepted the crypto token for payments from three of its clients in Israel and Taiwan; which eliminated the need for paying any international payment fees.
- The possibility of tracing products right to their sources is proving impossible for the food industry to make the most out of blockchain technology. One of the biggest retail corporations, Walmart, has included IBM’s blockchain-based Food Trust in order to keep track of their products at every step of the chain. Some of the other big names who also use Food Trust for this purpose include Nestlé, Tyson Foods, Carrefour, and Raw Seafood.
- Broken Hill Proprietary Company Limited, also known as BHP, an Australian mining giant has been making use of blockchain technology in order to digitalize its operations. BHP uses the technology in order to verify its suppliers and ensure environmental, social, and governance requirements are met along the supply chain.
- Sappi; a South African paper company and Birla Cellulose; an Indian fabric producer joined hands to create GreenTrack. This makes use of blockchain in order to track fabric products that come from sustainable forests by keeping track of the data throughout production.
Read more: How Blockchain is used in Education
