Using blockchain to drive supply chain transparency
Blockchain technology is a potential game-changer in supply chain management. It can significantly improve supply chains by enabling faster and more cost-efficient delivery of products, enhancing products’ traceability, and improving coordination between various stakeholders.
The global blockchain supply chain market is predicted to reach $9,852.91 million by 2025 from $93.16 million in 2017, at a CAGR of 80.2%. The need for companies to stay relevant in the highly-competitive market is a crucial factor driving the growth of the blockchain supply chain industry.
The ultimate goal of integrating blockchain technology in supply chain management is to improve agility, efficiency, and visibility across the supply chain network. Also, the technology can enable companies to anticipate issues and take immediate precautionary measures.
In this article, we will discuss the key benefits of blockchain in supply chain management, along with real-world examples of organizations utilizing this advanced technology to improve transparency and profitability.
Let’s get started!
What is a blockchain-integrated supply chain?
A blockchain is an innovative solution for a wide variety of problems in supply chain management. A typical supply chain involves different processes, including estimating the demand, procurement of raw materials, arranging sales channels and logistics, and then providing customers with visibility into their orders.
On the other hand, in a blockchain-integrated supply chain, there is significantly more visibility into the chain’s working. In this type of supply chain, one or more transactions are recorded on different blocks, making each authorized user an active participant in all the transactions. These recorded transactions are then distributed over a network of computer systems in the blockchain, making the information highly transparent.
Now that we have understood what blockchain technology in the supply chain means, let’s dive into the major benefits of integrating this technology into your supply chain.
Benefits of using blockchain in supply chain management
Blockchain in logistics and supply chain empowers your planning, sourcing, and logistics teams to collaborate and automate in a more trusted and secure way. It has also proven to mitigate risks, drive growth, and optimize costs.
Here are a few benefits of blockchain in supply chain management processes, so let’s dive in!
Greater transparency: As blockchain applications use a distributed ledger, transactions and data are recorded identically in different locations. All authorized participants with access view the same information simultaneously, providing full transparency. All transactions are immutably recorded and time and date-stamped. This enables users to view the entire history of a transaction and virtually eliminate any opportunity for fraud.
Improved efficiency: Because it relies on shared network infrastructure, a blockchain-integrated supply chain improves collaboration and communication for all parties. Greater transparency and traceability eliminate waste, duplicate orders, and accounts payable headaches such as invoice fraud and rogue spending.
Contract compliance contingencies encourage all authorized members to meet their agreed-upon obligations in a timely and accurate manner. Full visibility of financial performance and information improves financing options for businesses and lowers processing times by reducing uncertainty and risk.
Real-time tracking: A blockchain-based supply chain management process operates within the characteristics of transparency and decentralization. This makes it easier for users to be familiar with every activity going around at any point in time.
Blockchain applications also provide provenance tracking and record-keeping, making information fetching very easy with embedded sensors and RFID tags. The product history can be traced right from the origin to the present situation. Also, such accuracy in provenance tracking can be utilized to detect and prevent frauds even in complex supply chains.
Greater savings: Another important benefit of blockchain for businesses is that it helps to reduce costs. The improved efficiency and reductions in waste and stock loss with blockchain applications result in significant cost savings. It also eliminates the need for paper-based workflows and materials as transactions are recorded digitally. Going paperless lowers materials costs and eliminates ancillary expenses related to the labor and storage required to manage all those physical documents.
Strong customer relationships: One of the key applications of blockchain in supply chain management is to build a stronger relationship with customers. With the help of blockchain, customers can know everything about the product they are using.
It plays a pivotal role in enhancing the customer experience by making the process of order tracking transparent. Additionally, blockchain, when paired with the Internet of Things (IoT), enables customers to check if the product is fake or genuine and verify the entire life-cycle. This, in turn, is shaping a sense of trust among the consumers and the respective brands.
Financial settlements: To ensure smooth financial settlements, blockchain paired up with technologies such as smart contracts can be used to eliminate the requirement of manual approval of payments. The blockchain in logistics and supply chain processes can be useful in processes such as raw material order placements, settlements of taxes, and payments.
Smart contracts are a set of conditions and rules that are uploaded on blockchain servers to automate such settlement processes. Segments like insurance companies are already using its advantages.
Top blockchain supply chain use cases
While blockchain is an emerging technology, there are several companies across major industries already utilizing blockchain’s capabilities to good use in their own supply chain network.
On that note, given below are a few examples of brands that are utilizing blockchain to their maximum advantage and improving the efficiency of their core supply chain processes.
Walmart
Walmart is the best blockchain in supply chain example. It has integrated blockchain technology into its food supply chain to add transparency and traceability to the decentralized food supply ecosystem. Using blockchain, the company is now able to track the provenance and condition of its pork items coming from China. It is also utilizing the technology to trace the origin of mangoes in the US.
Brilliant Earth
Brilliant Earth has integrated blockchain to securely track its diamond’s origin and assure customers of its responsible actions. With a blockchain-enabled database, the brand can track the entire supply chain.
FedEX
FedEx has integrated this modern tech into its chain of custody to provide a trustworthy record and improve traceability, helping to address customer disputes. Also, the company has joined the Blockchain in Transport Alliance (BiTA) and is a vocal advocate for the adoption industry standard based on blockchain.
Bumble Bee Seafoods
Bumble Bee Seafoods is utilizing blockchain technology to trace the journey of tuna from the ocean to the local retailers. Consumers can see the origin and history of tuna using their mobile phones and scanning the QR codes given on the bags of tuna steaks.
Wrapping up!
Integrating the supply chain with digital technologies such as blockchain can lead to greater efficiency, flexibility and build resilience.
For businesses re-evaluating their supply chains, now is the best time to start putting their plans into action. Integrating blockchain in supply chain management is one of the most effective and safest ways to build a resilient business. And hence, we can undoubtedly say that the future of blockchain in the supply chain is bright.
If you are facing any challenges in your blockchain journey, you can partner with a trusted blockchain development company to take care of your adoption and migration needs. The experts will guide you through the entire process and offer the best blockchain development services.
