The supply chain industry is filled with obstacles, particularly when it comes to the logistics of getting goods and materials from one place to another. Current supply chain systems are laden with paperwork and the headache of unanticipated problems that arise in daily operations. Increasingly, experts see blockchain technology as a potential solution to simplifying an overly complex system.
As discussed in a previous post, blockchain is a decentralized digital ledger of transactions that records data in a way that prevents hacking and altering of the data. With blockchain technology integrated into supply chains, various stakeholders, lengthy distances, massive amounts of data and documentation, and collective trust, can all be digitally tracked within a single system. The blockchain’s distributed ledger can record and store vast data, as well as provide easy access to all stakeholders along the supply chain. Additionally, a central ledger stashes all transactions that occur in the supply chain, which provides enhanced security while delivering improved transparency and accessibility to all involved.
While organizations started gravitating to blockchain before the pandemic, COVID-19 has put increased burden on supply chains due to lockdowns and other disruptions. Blockchain can help organizations get their supply chains back on track while building improved trust among their consumers.
Why Adapt Blockchain?
According to Forbes Magazine, there are three major reasons organizations should integrate blockchain into their supply chains:
Blockchain is embedded at the transaction:
Within a blockchain-supported supply chain, blockchain begins with the transaction or event. For a lot of companies, this means utilizing supply chain data, such as stock-keeping units and purchase order data, and joining a supply chain blockchain network. The latter would allow them to share data with other organizations in order to track shipments and gain insight into what’s happening in the supply chain when things go wrong, such as identifying a lost or damaged item, and knowing who to hold responsible.
Everything is visible to all stakeholders in one location:
Blockchain can track and verify data relating to the product’s origin for the purchaser’s use. The technology merges the physical product with digital information about the product, which makes the financial process of the transaction simpler. The financial aspects of trade and insurance, as well as documentation and data, including purchase and sales orders related to the transaction, are all seamlessly embedded and accessible within a single location easily accessible to any stakeholder in the chain. This feature also allows organizations to improve their operational costs and working capital.
Blockchain builds loyalty with customers:
Businesses that use blockchain can drive brand value by giving their customers insight into their products. For example, a meat company in Denmark called Danish Crown created a blockchain system that gives customers the ability to scan and confirm the authenticity of a meat product at the store or at home. This process uses WeChat, a messaging, social media, and mobile payment app. By giving customers immediate insight into the product through the manufacturing process and food safety, customer trust and loyalty increases.
Blockchain technology is still evolving. However, it is likely to play a role supporting supply chains of the future. This means organizations that adapt early may see huge improvements to their logistics.
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(1 April 2021). 4 blockchain trends to watch in 2021, beyond cryptocurrency. TechHQ.
Hewett, Nadia. (19 June 2020). This Is How Blockchain Can Be Used In Supply Chains To Shape A Post-COVID-19 Economic Recovery. Forbes.