How blockchain is answering current supply chain challenges
Supply chains have become extremely complex to manage due to a combination of growing consumer demands, multiple channels to market, international complexities and many other factors. A supply chain can span a multitude of stages, international locations, hundreds of invoices and payments, have multiple parties involved, and extend over a long period of time.
Supply chain management is one of the real-world applications that blockchain can address and if anything Coronavirus (COVID-19) emphasises the importance of how emerging technologies can deliver tangible and trusted business benefits today.
Current supply chain challenges
The supply chain management system normally exists to increase sales, reduce cost and complexity of manufacturing processes, decrease fraud, and accelerate production and distribution. However, our current supply chains are facing increasing challenges due to several external and internal pressures such as increased complexity, volatility of demand and a changing retail landscape.
Consumers are demanding more transparency about where their goods are sourced from. Consumers are therefore willing to pay more to companies that provide a better supply chain transparency, and that transparency increases not only sales but also people’s trust and satisfaction.
As the manufacturing process becomes more complex, the supply chain inevitably becomes opaque and extremely inefficient to the point where it might be considered broken. This is even more relevant during extreme situations like COVID-19. The effects of which have caused suppliers in the chain to temporarily cease production, and logistics providers being unable to transport critical goods such as masks and ventilators as seamlessly, particularly across borders.
Speed and adaptability drive success in today’s globalised business world. Customers are expecting more from their shopping experience, being able to serve new customers via new channels has become a necessity across multiple industries. This can only be achieved by having a supply chain that can adapt and facilitate changing commercial trends.
Blockchain technology is the key enabler to help address these challenges in supply chain management.
To understand how blockchain can revolutionize the supply chain, let’s first have a quick recap on what blockchain is.
What is blockchain?
In simple terms, blockchain is a series of immutable records of data (called blocks). Each of these blocks contains a timestamp which are securely linked to each other using cryptographic principles (i.e the chain). Thanks to its inherent properties, blockchain is a technology providing transparency, immutability, and decentralization. It is therefore particularly well suited to bring visibility and trust to the supply chain.
Blockchain, a game changer in supply chain management
With blockchain, anyone with the right permission can trace any transaction, at any point in its history, and from any participants. Applied to the supply chain, it could bring huge benefits: every time a product is modified, the transaction could be documented, creating a permanent history of a product, from manufacture to sale. The supply chain would therefore allow for full information transparency, communication and collaboration across the chain from new product development to customer engagement. As a result, it would optimise the flow of goods and services by removing complexities, reducing costs, and growing revenue.
A blockchain-based supply chain would be a lot more resilient during unprecedented times like these. There are already examples of how blockchain is being used in the supply chain today, and how companies are reaping the rewards.
In our Global Blockchain survey, 84% of respondents said they are actively involved with blockchain and Gartner forecasts that blockchain will generate an annual business value of more than US $3 trillion by 2030. As a distributed, tamper proof ledger, blockchain doesn’t just cut out intermediaries; it reduces costs, and increases speed and reach. It also offers greater transparency and traceability for many business processes.
Blockchain is poised to transform business. The unprecedented impact of COVID-19 has accelerated the need for businesses to embrace this emerging technology sooner rather than later to ensure they remain resilient during this and any future challenging event. Businesses who are looking for long term resilience should investigate how they can embed blockchain into their supply chain.
