Blockchains and Supply Chains – A Perfect Match for Today’s Globalised World

Have you ever wondered about the lifecycle of a product? For instance, consider the smartphone or laptop in your hands right now. Think of the processes it went through before it reached your hands. Where did the raw materials come from? Who transported the raw materials to the factory where it was manufactured? How was it packaged? Who made the package? How did it reach the retail outlet from where you purchased it?

Any product today goes through numerous processes and multiple middlemen before it reaches the end customer. The entire system – factories, manufacturers, organisations, transport systems, resources, raw materials, information systems – that moves a product from the raw material stage to the customer is known as a supply chain.

On a global level, a supply chain consists of millions of people and systems along the way, making it extremely difficult for manufacturers to pinpoint with accuracy where different parts of a product come from. This is where supply chain management comes into the picture.

In simple terms, supply chain management is the process of planning, executing and tracking different processes along a supply chain. It involves the management of the flow of services, goods and information along with the movement of raw materials, half-finished product and full-fledged products from one corner of the planet to another.

With supply chains spanning across continents, the problems are multiple. Efficient supply chain management can help in increasing revenues, sales, decreasing overhead costs and frauds along while accelerating production and distribution.

While supply chain management may seem easy in theory, there are a whole lot of practical difficulties. As the business grows and expands, the interconnectivity of different parts of the supply chain is a massive challenge, leading to inefficiencies and loss of profits.

Can Blockchain help in Meeting the Challenges of Supply Chain Management?

With the revolutionary growth of blockchain-based applications, corporations are wondering if it could be applied to meet the challenges of the supply chain industry. It's seen as a better alternative to centralised databases for tracking products and simplifying record-keeping.Here are a few ways in which blockchain projects can help in solving the challenges of the supply chain industry.

Provenance Tracking

The supply chains of multinationals and big organisations have thousands of independent entities. As a result, it becomes incredibly challenging to keep track of every element in the system. Lack of transparency and tracking can lead to loss of customer trust, as brands are not able to pinpoint with accuracy the origin of a product.

Blockchain-based supply chain management can help in improving provenance tracking and record-keeping, as product information can be quickly accessed using RFID tags and embedded sensors. The blockchain can help in tracing the history of a product – right from origin till the time it reaches the consumer. The accurate tracking helps in eliminating frauds along with the system as well, thereby assisting brands to win customer trust.

Reduction of Operational Costs

Real-time tracking of the product along the supply chain helps in reducing overall operational costs. Blockchains can be used to speed up the various administrative tasks, thereby reducing the cost of operation as well as enhancing the security of transactions. Additionally, blockchain can help in eliminating multiple intermediaries and middlemen along the supply chain, thereby reducing product counterfeits and frauds.

Enhancing Trust

Trust among all the participants is a crucial factor for the smooth operation of complex supply chains. For instance, when a manufacturer outsources part of the production process to another vendor, the manufacturer must be able to trust the vendor to adhere to safety standards, while not breaching confidentiality agreements. The immutable nature of blockchains helps in establishing trust, as it prevents tampering of the entities along the way.

Benefits of Blockchain Integration with Supply Chain Management

Here’s a summary of the various benefits of using blockchain for supply chain management:

• Enhanced data visibility
• Increased transparency and trust
• Reduction of operational costs
• Elimination of frauds and errors
• Reduction of delays due to paperwork
• Minimise transport/courier costs
• Improvements in inventory management
• Increase in partner and consumer trust
• Identification and resolution of issues faster
• Improves communication among all entities of the supply chain

Blockchain – The Future of Supply Chain Management

With its increasing popularity, blockchains are revolutionising several industries today. When it comes to supply chains, even a single shipment has at least 20 – 25 touchpoints – people and organisations – with nearly 200+ intermediaries, all of which lead to a complicated and lengthy process.

When implemented efficiently, blockchain can help in eliminating the various challenges faced in supply chain management. It’s a win-win solution for all – manufacturers, distributors, transporters, and end-users.

Some supply chains where blockchains can be implemented include seafood verification, drugs, automotive supply chains and more. Companies of all sizes – from startups to large corporations – are exploring different ways to achieve the benefits of blockchain to improve their supply chain management.

Blockchains are indeed a game-changer for supply chain management helping to eliminate the vulnerabilities and inefficiencies of the current system. Want to know more about the use cases of blockchains for supply chain management? Talk to a blockchain expert from Blockshive, one of the best blockchain companies. Schedule a free consultation today.