Blockchain is the digital record keeping technology behind cryptocurrency networks like Bitcoin and Etherium. It has become a potential game changer for financial services and other industrial areas, including healthcare, automotive, government, insurance, consumer and retail goods, manufacturing, supply chain, etc. And today, we will see the application of blockchain technology in the supply chain.
With blockchain in the supply chain, traceability and delivery of products, coordination between partners and access to financial assistance can be made more profitable and faster. To better understand this concept, we must learn about the basic concepts of blockchain, its advantages in the supply chain and the difference in the use of blockchain in the supply chain compared to the use in cryptocurrencies.
Blockchain is a cloud-based digital ledger or data record with a shared database that shows real-time transactions and chronological changes in the ledger. The data or information is stored on a blockchain that is secure, verifiable, and tamper-proof. Additionally, the general ledger itself can be programmed to trigger transactions automatically. As a result, blockchain will allow a limited number of known parties to protect their business from malicious activities while improving performance in the supply chain.
In essence, blockchain has two dominant types, that is, distributed ledgers without permission, such as bitcoin, and centralized ledger with permission, governed by nodes and helps outside the public domain. This distinction in blockchain technology has essential effects in the context of the supply chain.
Advantages of Blockchain systems in the supply chain
Blockchain is a revolutionary technology that transforms business processes and the economy of different industries, and logistics is no exception. So let’s find out the way blockchain is making progress in supply chain management.
Real-time visibility and reporting
One of the main obstacles in supply chain management is execution errors. However, chaste record keeping on the blockchain can save a business from that. Whether it is to update schedules or correct the information provided, blockchain offers an element of identification at each step of the supply chain. To make mistakes visible in the initial stages for easy adjustment as needed.
Read: Blockchain Beyond Banking
Blockchain helps create a unique record for every transaction that takes place within a supply chain. Information and inventory flows are encrypted and recorded on the blockchain ledger. This ledger helps supply chain managers to instantly gain visibility into transaction history between suppliers and retailers. In addition, it helps eliminate the blind spots of traditional record keeping while offering greater transparency to improve coordination between the parties.
Instead of checking with the distributor on the status of the shipment, the general ledger can provide dynamic access to information. By nature, blockchain ledgers cannot be modified or deleted. These ledgers record all changes and need a general agreement to make these changes across the network. Even when an item is deleted from the registry, you will get the information about when it was deleted and by whom.
Authentication and quality control
Blockchain allows tracing the origin of goods from a broker or store to a specific manufacturer. Each batch of products is equipped with a label to ensure the validity of the data. These labels monitor the location and interaction of the good within the parts of the supply chain to maintain quality controls.
Shipping cargo from one location to another creates a supply chain that can be a difficult task to handle. Since it is about 30 organizations that communicate with each other multiple times. These interactions are generally related to payment and billing. Transactions using the traditional approach are complex. They consume a lot of time and effort, resulting in fraud, manipulation, and multiple errors. However, the use of blockchain in the supply chain helps automate billing and payment by linking calculations to the performance of specific actions.
In addition, blockchain in the supply chain helps reduce the need for procedures or intermediaries, eliminates errors, prevents fraud, guarantees accuracy and compliance in the synchronization of financial calculations and streamlines processes.
Blockchain smart contract in supply chain can efficiently save logistics industry from overspending. These smart contracts will automate business processes and workflow. The blockchain distributed ledger will help reduce delivery time. It will also detect fraud and reduce errors.
Real-world applications of Blockchain in the supply chain
Knowing the advantages of blockchain, you may want to know about the application of blockchain in real world supply chains. So, let’s take a look at that too.
- Securing the ethical source of the diamond is no easy task. It’s hard to trace them from mining and your supply chain transfers. Brilliant Earth (a diamond and fine jewelry retailer) is tracing the origin of diamonds through the Everledger blockchain. They have integrated blockchain technology into their supply chain to safely trace the origin of the diamond. It will also offer quality assurance to the customer. Blockchain will facilitate tracking with supporting documentation such as invoices and certifications. In addition, it will securely store chain of custody information in the supply chain.
- Like Everledger, IBM has multiple ongoing collaborations with various diamond and gold leaders to help them create new solutions using blockchain in the supply chain to authenticate and track their products.
- Walmart, IBM, JD.com, and Tsinghua University are looking for a way to use blockchain to increase food transparency and shipping efficiency. It is being done because of the E. coli outbreaks every year. In this case, Walmart and JD.com handle the shipping and production of products. At the same time, Tsinghua University and IBM are carrying out the research and maintenance of blockchain technology.
A little more Applications to Consider
- IBM and Maersk together are working on cross-border transactions between parties involving blockchain to improve the efficiency of the process.
- TagltSmart and OriginTrail aim to track wine bottles to trace their legitimacy using blockchain technology for transparency and QR codes placed on each bottle with details.
- Tony’s Chocolonely has partnered with Accenture to develop a private blockchain prototype testing its Ivory Coast field for child labor or slavery in cocoa supply chains to create a slave-free chocolate industry.
- Golden State Foods (GSF), a foodservice company, partnered with IBM on a pilot program that uses IoT devices to monitor temperature, RFID to track the movement of fresh meat, and blockchain technology to handle business rules between partners. of the supply chain.
- Origintrail, in collaboration with Labs Hoan Vu and Source Certain Int., Is using blockchain to track food supply chains on a deeper and more expansive scale. These labs run 800 chemical and forensic tests on products before uploading the results to the Origintrail blockchain. The tests are carried out on the soil and air of a farm to ensure freshness. If installed in all industries, this use of blockchain would be able to guarantee the quality and safety of food.
- Broken Hill Proprietary Company or BHP is introducing a solution based on blockchain technology to replace tracking sample spreadsheets both externally and internally among the wide range of providers.
Numerous companies are exploring the benefits that leveraging blockchain technology can bring. Blockchain is one of those technologies that organize the workflow of complex networks. Blockchain’s ability to offer unique identifiers to complete a complex process makes it preferable for supply chain management. Additionally, blockchain allows you to track withdrawals with pinpoint precision for better brand reputation.
The supply chain consists of a large amount of data that must be transferred through the supply chain levels in real time. By using blockchain in the supply chain, it is easier to automate processes, improve traceability, improve security and profitability. And in supply chains where the participants are unknown, blockchain can help add transparency, traceability, and trust. For blockchain solutions that improve the supply chain, learn about centralized or decentralized systems and choose the ideal one.
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