The Role Of Blockchain In Supply Chain Management

Calling blockchain one of the most disruptive technologies to ever be invented is not an understatement. Integrating blockchain in any industry can enhance its proceedings, and the article will talk about the Supply Chain Management circle.

The sector has come a long way in a few years and nowadays, it can garner a global reach. But its international expansion has brought several complications as well. Since consumer expectations and patterns change frequently, industries need to integrate solutions like blockchain to flourish in the coming time.

Blockchain can offer the supply chain management market abilities like origin tracking and transparency to keep it relevant. This article will talk about how blockchain can bring such changes and what will be its role in Supply Chain Management.

Here is everything to know about blockchain in the SCM industry,

What is Supply Chain Management (SCM)?

You can define SCM (Supply Chain Management) as the approach to managing the flow of resources, goods, information, and services throughout the procedure of converting raw inputs into complete outputs for end consumers.

The entire procedure holds seven crucial elements, namely: Information, Source, Planning, Production, Inventory, Goods Return, and Transportation. The components are used to build the fundamental structure of an organization. Since the components act as the industry’s future, it packs a pivotal punch in the domain.

The only issues that surround the industry are fluctuating consumer needs and security concerns; the standard supply chain is facing difficulties to sustain its relevance. Both problems are significant but can be solved with the help of blockchain technology.

Challenges Faced in the Supply Chain Management Industry

Some of the prominent problems faced in Supply Chain Management are as follows,

Lack of a Universal Database

Despite the global market being interconnected, most businesses do not share their database. This leads to communication barriers between firms, helping exploiters.

Low Asset Traceability

Tracing assets is difficult in Supply Chain Management despite offering advanced processes and equipment. This leads to the exploiters replacing original products with counterfeits.

Unnecessary Costs

As the data is kept confined within organizations, every firm spends funds on collecting the same data individually. This leads to an unnecessary rise in its capital and efforts.

Long Assessments

Assessing an asset’s quality in the SCM process is difficult due to its lengthiness. Since there is no effective risk management system involved, the industry is faced with grim consequences.

Unrequited Consumer Needs

Keeping up with the latest consumer needs is difficult, but taking viable measures to counter them is even tougher.

Blockchain Technology in Supply Chain - Pros, Cons, and Applications

What is blockchain?

Blockchain, popularly known as the technology behind Bitcoin, carries the potential to change the world, from finance to supply chain management. Blockchain can help in changing and improving supply chains, it is a distributed and decentralized ledger for recording transactions in a verifiable way that cannot be tampered with.

Blockchain helps in enabling steady and cost-efficient delivery of products and improving traceability of products, coordination between the consumer's, partners, and financial aid.

Blockchain's key areas of application in Supply Chain Management

Automotive Supply chain

Since blockchain technology allows the transfer of funds across the globe, it eliminates the need for traditional banking transactions that are made directly between payer and payee. Blockchain-based supply chain management system allows accurate record-keeping and provenance teaching including the product information which can be easily accessed through embedded sensors and RFID tags. Blockchain can be an ideal solution to protect their brands from duplicate products and in creating a customer-focused business model.

RFID-driven contract bids and execution

RFID tags allow IT systems to read the tags automatically and process them further, therefore it would be highly advantageous to use RFID tags for smart contracts in logistics.

RFID tags could be beneficial with the use of the possible set-up:

RFID tags for pallets store information available on the delivery location and date

Logistics partners can run the applications of these RFID tags and bid for a delivery contact

The logistics partners then offer an impeccable price and service gets the contract

The smart contact helps in tracking the status and final delivery performance of the product

Cold Chain monitoring with IoT and blockchain

Blockchain provides a single point of truth in a shared, tamper-evident ledger, IoT blockchain solution offers asset tracking with the use of IoT and a blockchain network. IoT for blockchain supply chain solution architecture brings enhanced visibility and insights from the physical world and results in improved collaboration and trust in the business world. The shared ledger technology provided by the blockchain enables participants in a business network to record the history of business transactions which is tamper-proof and cannot be altered.

This IoT platform on blockchain solution allows IoT devices to participate in blockchain transactions with the use of various IoT and asset data to validate business conditions in a trusted immutable blockchain ledger.

Blockchain Use Cases in Supply Chain Management

Live Tracking

A blockchain-based SCM system has been built to facilitate decentralization and transparency. It helps the business monitor every activity in real-time.

Quick Processing

Although supply chains handle large and sophisticated databases, the process is overextended because of intermediaries. Smart Contracts have been prepared to eliminate their dependencies on paper.

Better Traceability

Integrating blockchain in the supply chain has reduced counterfeit products’ supply in the market. With better traceability, such practices are reduced significantly.

Healthy Consumer Relationships

Providing the needed product-related information is simple with blockchain, taking customer experience to a new level. Plus, it allows them to check the product’s genuineness.

High ROI

With blockchain, businesses are establishing premium brand prestige, resulting in a higher return on investment.

Enhanced Trading

Ownership and licensing evolve a bit with the help of blockchain. Since every organization possesses a similar ledger version, they can easily monitor the ownership records.

Real-World Supply Chain Applications

Stratis

Stratis, a UK-based platform that primarily concentrates on leveraging Microsoft technologies, is now working with programmers across the globe to provide an ultimate solution for supply chain management, powered with complete visibility in a trustless, highly secure decentralized environment. This indicates that programmers worldwide will actively develop and will be committed to delivering diverse solutions leading to demonstrating the power of the platform developed by Stratis and supporting in building with Stratis Blockchain Technologies.

Treum

Treum is a next-generation blockchain-based supply chain operating system that concentrates on traceability, transparency, and trade ability. It allows enterprises to build trust with their customers by seamlessly recording on assets end-to-end information, enabling manufacturers to verify if their supply chain is fulfilling their product goals.

Naturipe Farms

With the use of an SAP cloud platform Blockchain service to track blueberries from farm to fork, Naturipe farms place QR codes onto open crates of fruit and those codes remain on the crates and consumers can scan the codes with their smartphones to see where those berries were grown and what farm practices were adapted for them.

Tony's Chocolonely

In many parts of Africa, millions of tons of cocoa beans are produced annually by child laborers and slaves, however, Tony's Chocolonely an Amsterdam-based chocolate company has taken a step ahead in helping to end child labor and modern slavery. They are establishing a shared value chain platform called bear tracker and it includes a monitoring tool that can track the location of the bean anytime and anywhere. All the farmer coops and supply chain actors are united with the bean tracker and data is entered every week.

GlaxoSmithKline

One of the largest pharmaceutical companies in the world GlaxoSmithKline is working with IBM and other significant companies to emerge as a new blockchain supplier network, the organization's platform leverages cryptographic security and smart contracts and provides enterprise insights as assets management and propagation throughout their entire supply chain.

This decentralized approach and an immutable audit trail developed on blockchain eliminated the manual time-consuming processes and reduced the risk of fraud and errors stepping up in creating seamless connectivity across supply chains.

WWF- Blockchain Tuna project

WWF is planning on bringing traceability and transparency to the fishing industry, the illegal and unregulated fishing is a significant problem in the pacific region and blockchain can provide an ultimate solution to it by running a simple scan of tuna packaging. It will provide a smartphone app that will store the end-to-end information of a tuna fish, whether it's about where and when the fish was caught, by which vessel, and fishing method.

Luxarity

Luxarity has partnered with significant blockchain development companies to provide full transparency of the donation cycle by leveraging blockchain technologies. They aim to develop a user-friendly donation tracing solution that can seamlessly integrate with their existing customer journey and encourage consumer participation without any inconvenience. It focuses on creating an immutable record of how contributions are allocated, the consumers can select which social and educational causes they want to support.

Brilliant Earth

In partnership with Everledger, Brilliant Earth the retailer of ethically sourced diamonds is tracking the provenance of its diamonds through blockchain. Blockchain technology helps in tracking the diamond and other supporting documentation such as invoices and certification making the storing of this chain of custody information highly secure.

GenuineWay

GenuineWay is a Swiss software company that aims to create ready-to-implement digital solutions for small and medium-sized companies and promote socially and environmentally friendly enterprises. The tech service provider is expertise in the development and distribution of blockchain integrated solutions for manufacturers of consumer goods in the food, fashion, cosmetic and various other diverse domains. It applies QR codes to food and liquor items and deploys smart contracts for certification of manufactures that provide artisanal food products for end consumers.

Challenges that need to be met

Supply chains are complex and lack transparency and integrity, however, a blockchain can help in filling all these gaps making supply chain operations and management much easier for the involved parties. Like every other technology, it does offer a plethora of benefits like enhanced traceability and reliability, there are still several hurdles you need to be ready to deal with.

Therefore, here are a few challenges that one should keep in mind while implementing blockchain-powered supply chain management solutions.

Decide whether your solution should be fully dependent on the blockchain or you’ll use it only for specific features

Firstly, you should determine the extent To Which You’ll Use Blockchain Technology. Since moving an entire supply chain platform to a blockchain will require a lot of resources and efforts hence it is better to start with few blockchain-powered features for example in delivery tracking blockchain can result in enhancing the transparency of logistics processes without causing any system casualties similarly you can continue integrating blockchain features into your supply chain one at a time.

Data Quality Assurance

One of the primary features of blockchain include Data immutability; however, supply chains are still led with data entered by people and people tend to make errors. With a blockchain, it will be harder to fix incorrectly entered data in comparison to a non-blockchain application, therefore data entered needs to be free of errors and mistakes.

Data should be accessed by the right people

In order to avoid data leaks and financial losses, it’s crucial to share data with the right people in the right conditions. Determining the different levels of data confidentiality makes unauthorized users ( including your third parties) inaccessible to the information that they don't need to access, it assists you in determining a set of roles with associated access rights and assigns roles to everyone under the supply chain management system.

Wrapping it Up

The rise of blockchain took place when people wanted to decentralise applications and operations and make dependencies on centralised third party entities like banks optional instead of mandatory. Industries are implementing this distributed ledger technology and using it to solve long-standing business problems. Supply chain management is slowly gaining prominence in the global market, but several hurdles are in its path. Most of these roadblocks can be eradicated with blockchain, and the article has shed some light on how.

Disclaimer: All the information in this article is based on personal opinions and views and do not necessarily reflect the official policy or position of any organisation or company, this article is solely created for reading and informational purposes and should not be mistaken as professional investment advice related to cryptocurrencies