Blockchain is making ripples throughout every single industry and the supply chain scene is no longer a stranger to it. This nexus of software enables information to be present on multiple systems while ensuring every single outpost has the same information that is updated constantly and tracks every alteration along the way. This is particularly advantageous to supply chain management (SCM) as users can record and update details such as costing, location, dates, certification and quality among a variety of parameters for an enhanced system and reduced losses. It can be applied across all industries but proves to be a big game-changer in supply chain management with respite from fraud, smoother compliance adherence to ensure an organisation’s position as a leader. What are the key areas the supply chain benefits in?
From the very start, an item is logged and tracked so that its origin and journey is visible to any party involved. Not only does this increase trust but allows for proactive measures to be taken in case of problems. Walmart uses blockchain to track the pork sourced from China. Each piece of meat is recorded from where it came, how it was processed and its sell-by-date. With blockchain, traceability is automated, made easier and sped up in correlation with electronic tracking technology (such as WiFi, BLE or RFID).
The above visibility offers the opportunity for improved savings. Without this mechanism, an organisation would have to hire several people to audit orders to gain data-centric benefits. This is done away with and instead they have a constantly updated digital ledger that consolidates data from all relevant parties. For instance, if the Walmart container in the above point was compromised in terms of temperature, the parent company would be notified and a replacement shipment in addition to insurance claims and disciplinary action would be taken instantly to ensure minimal loss.
The data gathered across the entire supply chain is real-time and entirely upto the mark thanks to the structures and third-party checks carried out on blockchain networks. Instead of excess inventory as a safeguard against the uncertainty of product quantity in various locations, organisation’s can track and manage resources at the ecosystem level. This results in better forecasts and a precise inventory. BHP Billiton, the world’s largest mining firm, utilises blockchain to track and record data throughout the mining process with vendors. This enhances internal efficiency and allows for more effective communication with partners.
Delivery and payment are included in smart contracts with blockchain that include all involved enterprises, logistics partners and banks. This simplifies functions and reduces working capital requirements to produce a more direct influence on the bottom line. The smart contract utilised by Axa for flight delay insurance had transparent terms and an automated reimbursement procedure where a 2-hour delay would trigger the refund. (Source: https://existek.com/blog/what-is-smart-contracts-blockchain-and-smart-contracts-use-cases-in-business/)
Blockchain ensures there is one version of the ledger shared with all parties and not controlled by one all-powerful, centralised intermediary. If anyone tries to manipulate the system in any way, it is red-flagged and documented for the entire ecosystem to see. In the case of Chronicled, they used RFID tags with blockchain to validate luxury goods such as clothing and watches to protect against counterfeiting. Meanwhile, De Beers tracked their diamonds from the mine too when a sale was carried out to avoid ‘conflict’ or ‘blood diamonds’. This also gave customers a heightened guarantee and the company gained more credibility.
Applying blockchain to SCM will give any company a competitive edge in terms of efficient workflow and refined customer experience that leads to long-term relationships and elevated profits.