Blockchain can be the ideal solution to provide the necessary transparency, visibility and trust across the supply chain to strengthen it amid COVID-19
Industries are struggling to minimize the effects on their supply chains while governments seek to control the spread of COVID-19. According to a report by Dun & Bradstreet, the pandemic has impacted the supply chains of 94 percent of Fortune 1000 firms. Also, businesses perceived to be giants in the technology and supply chain are struggling. Apple is unable to get the next shipment of iPhones, and its factory in China has been temporarily shut down by Tesla.
The issue is that supply chains have become widely dispersed, competitive, and lean. This works to everyone's advantage when times are good. However, monitoring and traceability, agility, and visibility are restricted even then. But when things go wrong, they go poorly, and internationally, the cumulative effects create chaos. Pandemics encourage us to think outside the box about how to be stronger and more sustainable. At Oodles, our experts believe that blockchain-based supply chain solutions development can prove to be a game-changer amid COVID-19.
A single OEM product can have parts or services from hundreds of suppliers, and an efficient failure detection system must dig deep into the supply chain. In order to ensure the accuracy of results, each layer must be closely scrutinized and processes placed in place.
A recall of products is guaranteed upon failing to comply with environmental and other compliance standards or the U.S.-imposed "conflict minerals" requirements.
Streamlined communication between stakeholders
All parts of the supply chain must work closely together to prevent product recalls, but the OEM's key role is to harmonize the relationship.
Some product recalls are due to damage sustained after manufacturing rather than due to flaws in products or problems on the factory floor.
Also, Read | Strengthening Food Supply Chain with Blockchain Amid COVID-19
Global supply chains are calling out for a structured approach to trustfully coordinate data. They are looking for an approach that can help to build a tool for risk management and disruption mitigation. Blockchain can be used to construct such a risk-based model that can prepare a supply chain to withstand pandemics like COVID-19. Blockchain is basically a distributed ledger where transactions are exchanged with various computers rather than stored in one central location.
The visibility of multiple-party transactions gives transparency and protection. When blockchain information is uploaded, it can not be altered, ensuring immutability and trust. That becomes the keystone of a stable digital supply chain. All related information is available to the entire supply chain if transactions are stored in the blockchain. Immutability, traceability, and accountability describe the goods' provenance in the supply chain.
Also, Read | Advantages of Using Blockchain and IoT for Supply Chain Management
Most companies will be measuring the supply chain visibility during 2020 due to COVID-19. Company survival at times like these would be a result of how well companies know their value chain. Under the immense pressure of these latest global innovations an obsolete supply chain structure may buckle. To adapt to rapid shifts in demand, many companies also lack a view of upstream and downstream inventory levels. In order to spread the risk, firms made efforts to have several suppliers after previous disruptions. But they did not have adequate network visibility to realize that their new tier 1-vendors were relying on the same old tier-2 vendors.
Blockchain-based supply chains connect all parties to the same network, untangling the intricate global structure and making every step of the way clear. Both layers of suppliers and subcontractors, their positions, and the production potential can be seen by the companies. This helps them to determine their threats, model situations, conduct what-if assessments, and take proactive measures. It also lets businesses easily monitor their responses as circumstances are rapidly changing. Knowing exactly where the goods are in real-time also allows businesses more versatility in order management. In one hypothetical example, 100,000 devices have been ordered by a router company, half of which are made in Japan and half in Wuhan, China. On the blockchain, the company can see that development is slowing in Wuhan. This helps the organization to take remedial steps and mitigate the effects.
Also, Read | A Use Case for Blockchain in Thorium's Supply Chain Traceability
Bulk freight exports have reduced because of the impact of the pandemic since January, by 70 percent. Countries are taking several protective steps at ports of entry to delay the spread of the virus, such as limiting the disembarkation of crews. Ships also have to include crew health declarations at certain ports. If an alleged COVID-19 case on boards, the relevant authority does not permit the vessels to dock there. Also with these precautions, because of their regular contact with individuals from other regions or nations, port staff and truck drivers are at greater risk of infection. The inability to work in the absence of physical contacts, which stems from the lack of full digitization of different documents and processes through supply chains, is a fundamental problem for global trade. The human interaction layer provides the trust necessary for these records/processes.
Also, Read | Driving Supply Chain Innovation with Blockchain Solutions
A step to increase the current digital capacities of supply chains with trust should be taken by people, companies, countries, and the world, trust that is not a feature of relationships, physical interaction, or any other outdated means. In order to sustain supply chains in any situation, trust must be inherent to the processes and thus scalable.
To support companies leapfrog to trusted digital supply chains, Blockchain is the best-suited technology. On average, 28 parties engage in the shipment of one sea container, and they all have their own record-keeping systems. Blockchain, which is at its heart a trusted digital ledger, stores the digital transaction records of all parties. Thus, for all parties concerned, blockchain offers the sole source of fact. Even before a ship arrives at a port, without having to sift through tonnes of paperwork, authorities get all their details-the owner, cargo material, crew members, and route. Port authorities can then determine whether it is appropriate to inspect, quarantine, or clear the ship. This decreases the ambiguity as well as the need for human experiences.
Also, Read | Streamlining Supply Chain Management with Blockchain Technology
One of the busiest in Europe, the Port of Rotterdam is creating one of those blockchain-based port logistics solutions. The entire process of shipment is paperless, traceable through to final delivery. Shipments and orders are available in real-time to all stakeholders and financial transactions are immediate, risks decreasing and efficiency and interoperability increasing.
Reconciliation is another process that takes up a lot of time, especially in times of adversity. This puts a financial strain on transport companies that, owing to government restrictions and low volumes, might already be losing company. In such circumstances, smart contracts will prove worthwhile. Smart contracts are protocols that, when certain conditions meet, automate digital transactions and trigger events. With smart contracts, stakeholders countersign and check the lading bill digitally as soon as the truck delivers the goods to the warehouse. Consequently, it automatically transfers funds to the transport company. Eventually, all parties — the bank, Walmart, and the transportation company — can check transactions instantly.
Also, Read | Making Supply Chains Smarter with Blockchain Smart Contracts
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