Supply chain management was a big idea to improve visibility and control on goods as they moved from point A to point B a few centuries ago. However, with current technologies and concepts, it has become difficult to manage such a big and complex industry.
On the peak of Gartner’s hype cycle, Blockchain is standing tall to face the industry challenges, with transparency, security and trying to address the problems which none of the existing technologies can solve. Blockchain has proven its worth in monetary industries like remittance and cross-border payment and is also spreading its reach to other industries like healthcare, mortgage and tracking the origin of products across multiple geographical locations – an essential part of supply chain.
Problems in Supply Chain
Before we go to the solutions, let’s take a look at a few of the problems:
- With changes in demand and supply, the entire management chain needs to adapt and for this, periodic redesigning is required
- Consumers cannot verify whether the claims made by the company about the quality of their products were from a reliable source
- Inefficient product recalls in case of illness and hazards. One great example is the American fast food chain Chipotle Mexican Grill – a toxin called E.coli was found in the food products, tarnishing the restaurant’s reputation in 2015
- The supply chain is an integral part of every big organization and integrity has become a crucial part of the environment. Companies need to be accountable for any illicit activities, such as counterfeiting, maintaining safety standards etc., taking place within their supply chain
Blockchain – Enhancing the Supply Chain
Ensuring both transparency and security in the form of a digital ledger, Blockchain can fix and solve current problems of the supply chain. A simple application of Blockchain in the supply chain would be to register the transaction of goods between identified parties, along with price, location, date, quality and any other information which is relevant to the supply chain.
The digital ledger is updated with new transactions whenever the product goes from one party to the other. This whole process is automated, thus decreasing the chances of human error and the time delays for the entities to know about the exchange.
By using Blockchain the following tasks can be improved –
- Tracking order details, shipment notifications and other trade-related document
- Recording the quality and quantity of transferred assets
- Tracing the true origin of the product
- Provision of better security in the form of cryptographic and immutable transactions
- Real-time updating of records which are error-prone, thus reducing the reconciliation labor
- Automating tedious processes, like payments and notifying delivery of goods and services, with the help of Smart Contracts
The Future of Supply Chain
Before Blockchain can bring a boom to the supply chain, the industry itself needs to work around best practices and establish standards of technology which are acceptable across the globe. Once these questions have been answered, Blockchain’s features such as transparency, security, and traceability, can build the bridge to evolve the supply chain, thereby making our economies safer and more reliable by promoting trust and preventing the implementation of questionable practices.