Blockchain in supply chain
The concept of decentralization has been around for decades; however, the World experienced its practical and most disrupting implementation in the form of blockchain technology in 2009. Previously, it was only meant to support cryptocurrency transactions (Bitcoin in particular), but nowadays, the utility of blockchain covers almost every industry, and supply chain management happens to be one of them.
It is worth noticing that since there are dozens of organizations and hundreds of employees involved in each SCM solution, the pros offered by the blockchain technology in this sector (to address the prevailing issues) are unimaginable.
Supply chain management problems today
The SCM landscape has changed dramatically in recent years. Major technological breakthroughs, evolving regulatory frameworks and unstable economic conditions have brought in new opportunities, but also a host of new challenges for the industry. As manufacturing and global trade continue to intensify, the growing reliance on vast networks of suppliers, service providers and other counterparties increases the complexity of SCM processes, putting more strain on existing supply chains.
Operating in such a challenging environment, requires adopting robust and flexible solutions that could help streamline SCM processes and tackle pressing issues related to counterfeit and fraud, traceability,, record keeping and supply chain inefficiencies, among others. To add some specificity, here are some of the most concerning problems the supply chain management industry faces today:
First things first! There are plenty of people involved in moving a single unit of any product, let alone the heavy lots. It should also be noted that some people fail to remember the deadlines due to the manual operations at their end, thus affecting the performance of the entire supply chain.
Since this niche is quite time-bound and sensitive in some cases (e.g. pharmaceuticals), if a single intermediary skips the deadline, it does not only cost a hefty amount in terms of penalty, but it also becomes the matter of life and death.
So, the stakeholders involved in any supply chain need to think about automation and efficient data sharing to ensure their reputation is maintained, the clients stay happy and the team’s productivity boosts as well by meeting targets.
This has become a huge problem in pretty much every industry and since we are talking about SCM at the moment, the impact of producing, transporting, and receiving counterfeited goods implies that time, money, and resources are wasted at 3 different levels. Therefore, the cons are unimaginable!
According to a report, it is estimated that by the end of 2020, the value of (Global) counterfeiting is expected to hit about $1.82 trillion, which is more than the total net worth of many industries combined! This statistic suggests that counterfeiting is an International problem and the issues raised by this unethical practice undermine several associated industries. So, it must be curbed on a priority base with the help of efficient provenance.
Moreover, there is a dire need to introduce series of checks during exploration, extraction, production, and transportation to ensure that integrity is maintained right from the exploration of raw material until the time the final product reaches the consumer.
While transportation serves as the backbone of supply chain solutions, it suffers from an array of problems and even in some multinational SCM companies, this is the only department that has not been fixed and due to the very fact, these organizations suffer heavy losses every year. Therefore, it is important to keep transportation as crisp as possible.
Since several companies do not give particular attention to tech-based transportation, the probability that the following activities remain neglected and unquantifiable remains high:
How Can Blockchain be Implemented in the Supply Chain Industry?
Now that we have understood the generic benefits of blockchain technology in the supply chain industry, let’s shed some light on the specific use cases to understand how it can be useful in particular areas.
Electric Power Supply Chain
Electricity is all around us. However, we can revolutionize the way it is distributed in the grids with the help of blockchain technology. It would not only ensure efficient distribution but get rid of corruption as well by maintaining an immutable log that serves as the source of truth for all the entries made by the stakeholders involved.
Nowadays, companies extensively use RFID tags (particularly for expensive shipments sent through cargo ships) to monitor the movement of products in their respective supply chains. However, since all the data is stored on centralized servers, it can be deleted in a single instant and this raises many concerns.
With the help of blockchain technology, a decentralized system can be deployed to ensure that data generated by RFIDs is stored after mutual consensus – it would not only ensure that the entire network agrees on ‘something’, but it would also help auditors in trusting the source of data and doing their actual job (i.e. auditing), instead of verifying the credibility of the source of data.
This is an expensive business, particularly when fossils and expensive stuff are involved, like diamonds. A couple of years ago, De Beers implemented a blockchain-based system for their supply chain to ensure that extracted diamonds are tracked at every instant until they are handed over to the end customer.
The same approach can be used in any mining business where provenance and minute-by-minute tracking holds primary importance
It is quite evident that the overall supply chain industry is growing at an incredible pace and its applications have boomed in the last couple of years from mainstream supply chains (e.g. food and retail) to even some of the riskiest ones (e.g. diamond extraction).
So, it proves the market is gaining traction and in the near future, almost every major supply chain management company would go for blockchain technology in at least one of their use cases.
This is where LimeChain comes into play and provides you a comprehensive consultancy service on blockchain and Web3 technologies to plan feasibility for your idea. We also have a team of blockchain developers who specialize in creating private blockchains (ideal for sensitive products, such as diamonds, pharmaceuticals, etc.) and tools for helping your community to use the blockchain in a better way.
Sounds like something you need? Do get in touch with us at [email protected]