So the future of blockchain in the supply chain is quite evident. Let’s deep-dive into the basics and understand how it simplifies the underlying complexities.
What is blockchain in supply chain management?
Built on distributed ledger technology (DLT), blockchain’s core function is to record information in a decentralized, distributed, and public system. It aims to leaveno scope for alternation, hacking, and data breach.
In the context of supply chain management, blockchain:
increases visibility in the workflow and communication
enables end-to-end tracing of logistics in real-time
minimizes human staffing and automates the processes, and
deploys Electronic Data Interchange (EDI) systems to secure sensitive data.
Blockchain utilizes a shared IT infrastructure—wherein manufacturers, suppliers, distributors, retailers, auditors, and other associated partners smoothly share and synchronize crucial information alongside supply chain activities. This, in turn, improves the customer success ratio significantly.
Applications of blockchain in supply chain management
Here are some prominent use cases of blockchain in the supply chain industry:
Wholesome logistics management
Regulatory and compliance
Finance and risk handling
Supply chain control and inventory management
Holistic food safety
Cold chain tracking
Direct consumer to supplier (or producer, manufacturers) payments
How does blockchain work in supply chain management?
Supply chain management deals with multi-party, multi-industry, and multi-geography, which adds more complexities to the logistics operations. But blockchain simplifies it by enforcing smart contracts and validating supply chainsthrough permissioned blockchains.
Within the blockchain network, the firms can hassle-free trace the goods and services from the source to the current destination.
It records every “in-transit” movement in the permanent digital ledger, visible to the multi-party involved and the end customers. This level of transparency establishes credibility across all associated channels and mitigates security risks.
Eventually, blockchain makes supply chain operations super efficient and diminishes the possibilities of human error, unwanted delays, and additional costs. Moreover, it eliminates the role of intermediaries, which minimizes the risk of fraudulence.
In data breach and counterfeit cases, blockchain detects the exact vulnerable point. As a result, it allows firms to operate logistics functions in ‘zero trust’ environments.
What are the critical requirements in supply chain management for blockchain success?
The requirements are subject to change following the business (and industry) specific needs. But the below-mentioned six parameters are critical in every aspect.
“What (type of), When, How, and Between Whom” the information needs to be exchanged. The reason being is Blockchain records data flow publicly in timestamped blocks with clear detailings of the participants.
Licensed partners, services, software, and products; because Blockchain permits communication and data transmission only between trusted parties.
All the multi-party involved must adopt the Blockchain network to streamline and synchronize workflow throughout all linked channels.
Integration of Blockchain technology with existing IT infrastructure. Like third-party applications such as ERP, CRM, and others.
Defined Standard Operating Procedures (SOPs) for all associated partners, for example, enforcement of EDI.
Financial projection on the computational cost incurred during the Blockchain transactions, corresponding to the budget and expected profit.
What are the core features of blockchain in supply chain management?
10 core features that expedite the productivity of supply chain operations are:
End-to-end automatic recording of supply chain activities in the distributed ledger
Concurrent tracing and tracking of commodities with live updates
Permitting supply chain transactions via smart contracts
Facilitating holistic license and identity management of associated partners
Onboarding of logistics documents adhering to GS1 standards
Recordkeeping complete audit trail of supply chain documents
Validating supply chain transactions by only trusted/licensed partners
Shielding sensitive data via hashing and consistent timestamping
Authorizing ownership of supply chain transactions via e-sign
Implementing security through multi-factor authentication (MFA), identity fraud detection, permission-based access control systems, and many more.
What are the benefits of blockchain in supply chain management?
Thetop 8 profitable benefits of blockchain transforming the supply chain are:
The high-level blockchain tech stack is available at a pretty economical range, substantially reducing development, administrative, and maintenance costs.
Efficient at par excellence
From planning to production, trading, and handling logistics systems, blockchain accelerates and improves processing speed at every stage.
Advanced automation with quality assurance
Blockchain flawlessly automates complicated and nested supply chain tasks with optimal management of resources, analytics, as well as quality control.
Prevents unnecessary consumption of time
Blockchain replaces conventional supply chain documentation with live tracking of goods and public history trails. As a result, it minimizes stock loss, prolonged transit and shipping time, miscommunication, and overall turnaround time.
Delivers absolute accuracy
Supply chain management often deals with inaccuracies that directly impact and delay the subsequent interlinked channels. But blockchain’s integration with IoT has successfully overcome this biggest challenge.