A supply chain is a crucial business growth driver for any industry. Now, with multiple checkpoints, intermediaries, and loads of paperwork involved at each stage of a process, supply chains have become increasingly complex and unstreamlined. Blockchain is an emerging technology that is gaining significant traction across industries due to its feature-rich characteristic. It establishes authenticated and verified data communication between each stakeholder in a supply chain without depending on a centralized authority. With blockchain supply chain solutions development, supply chain managers achieve transparency across a supply chain by verifying and storing data in a shared, distributed manner, in real-time.
Blockchain is “a technology that enables people who don’t know each other to trust a shared record of events,” according to the Bank of England. Let’s take a look at the essential aspects of emerging technology.
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Essentially, blockchain technology is a digitally distributed ledger or database of records, transactions, or executed events, shared across participating parties. A consensus of participants in the system timestamps and verifies each transaction in this system.
Further, the technology follows the distributed transaction verification method that promotes data integrity and transparency. This concept dubs it an enabler of “trustless trust.” It means that parties in a network without trusting each other can participate in exchanges of value with absolute assurance.
Also, unlike centralized systems, blockchain has no central point of failure as all participants get a copy of the state of the ledger. It makes the business applications and solutions built using it more durable than a centralized system.
Additionally, we can program blockchain with embedded instructions like if-else and if-then statements for executing actions when parties in a transaction meet certain. These instructions are essentially programmed smart contract solutions. A smart contract solution links any information in a blockchain to consequences like transfer penalty fees when parties fail to meet agreed terms.
Developing supply chain solutions on blockchain can facilitate participants to securely record and share various details like price, date, location, quality, certification, and other relevant information using a single, unified system. The availability of this information within a unified platform powered by blockchain establishes the characteristics of the supply chain
Blockchain solutions can enable stakeholders to increase transparency, as well as reduce cost and risk across the management of the supply chain.
With blockchain, it is possible to digitize physical assets and create a decentralized, immutable record of all transactions. Further, it enables supply chain management with enhanced end-to-end transparency and accurate tracking of every transaction and asset in the network. Additionally, the combination of IoT and RFID enables the tracking of assets from production to delivery to an end-user while providing access to product history and transparency. It promotes enhanced visibility and transparency for both businesses and consumers.
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Blockchain’s transparency can also alleviate fraud of high-value goods like diamonds and pharmaceutical drugs. It enables stakeholders to assess how ingredients and manufactured goods pass through each subcontractor. It reduces or eliminates the impact of counterfeit products. As a result, it reduces profit losses from counterfeiting and gray market trading, as well as establishes confidence across end-market users.
Furthermore, blockchain solutions can enable businesses to gain more control over outsourced contract manufacturing, an important aspect of supply chain management. It does so by enabling all parties within a respective supply chain to access the same information. It potentially reduces communication or transfers data errors. Also, then there is no need to spend more time validating data. Contract managers can spend that time on either improving quality, reducing cost, or both.
Finally, blockchain can enable an effective audit system of supply chain data that will result in streamlined administrative processes and reduce costs. It can accelerate processes involving time-consuming manual checks for compliance purposes through a distributed ledger of all relevant information. However, notably, implementing blockchain solutions in the supply chain requires cooperation and support from all stakeholders.
To manage freight tracking, providing buyers, sellers, and officials with a mechanism to track goods shipped globally, a shipping company used a blockchain-powered system.
In a general scenario, when products travel across borders, it requires review and approval from up to 30 parties before arrival. Consequently, it creates heavy paperwork and opens vulnerability for fraud at multiple points in the process. By collaborating with customs and other necessary authorities, the company streamlined the approvals process. It created a secure record of transactions and approvals, which reduced the time needed to transport goods.
Blockchain has the potential to reduce administrative and logistics timelines in shipping from more weeks to less than one day.
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A startup has started using a blockchain solution to increase supply chain transparency in the second-largest traded commodity, coffee beans. It uses a shared, decentralized blockchain protocol for enabling real-time mobile transactions, storing transaction information, and facilitating all parties to access payment records at any time. The system promises to boost transparency across the supply chain for coffee beans shipment while ensuring that farmers get appropriate fair-trade payments.
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Last but not the least, another potential application of blockchain solutions is provenance tracking of assets across a supply chain within the pharma industry. Currently, it is difficult to track active pharmaceutical ingredients during the manufacturing process. Also, pharma companies face challenges from counterfeit drug operations around the globe. Blockchain’s characteristics like immutability and transparency provide a foundation for establishing traceability of drugs from manufacturing to end consumers.
For achieving greater transparency and efficiency across the supply chain with our blockchain solutions connect with our blockchain experts.