Optimizing supply chains has always been a business priority, but the issue was brought into even sharper focus during the pandemic, especially in relation to supply chain resiliency. More and more companies are turning to blockchain technologies to improve their supply chains and deliver on their business goals. The following nine reasons demonstrate why blockchain is great for the supply chain.
- Increases Visibility
The bigger and more complex the supply chain, the less visibility there is. Blockchain technologies chronologically record all actions and flows in the supply chain, including information, inventory, and financial data. Each blockchain record is then distributed to all supply chain parties, providing instant visibility.
- Reduces Disputes
Each party in the supply chain has its own copy of the blockchain and all the records and transactions it contains. Nothing can be changed and there can be no dispute about the sequence or nature of events. Even where challenges or disruption exist, the blockchain can accelerate a resolution.
- Enable Faster and More Cost-Efficient Movement of Goods
One of the major problems with traditional supply chain models is the synchronization of data and transactions between the various participants.
Blockchain technologies provide almost instant synchronization, eliminating this problem.
The technology can go even further, though, particularly with the use of smart contracts. For example, smart contracts can be used to automatically release payments once the obligations of a contract have been met, automating this previously manual task, and speeding up the overall process.
- Enhance Traceability and Reduce Counterfeit Goods
Blockchains can be used to record identifying information about products and goods as they flow through the supply chain. This identifying information can be restricted to data that is only required for traceability purposes, protecting commercially sensitive information. The record on the blockchain can then be used as required to trace a product back through various points in the supply to its source.
Each participant in the supply chain can add relevant traceability data to the blockchain, helping to identify the cause of the problem when a tracing event occurs. The system can also be used to authenticate products. IBM's Food Trust solution is one example of a blockchain technology that is helping to eliminate food fraud, but the principles can be applied to a range of industries, including pharmaceuticals, medical devices, technology, and more.
- Improve Co-Ordination Between Supply Chain Partners
Blockchain technologies make it possible to share inventory flow information between parties without disclosing commercially sensitive information. This enables high-level visibility that can then result in the diverting of inventory whenever bottlenecks or disruptions occur.
- Improve Compliance
An end product can be made up of multiple component parts, all of which can be subject to regulations. The traditional method of tracking compliance through the supply chain involves complex paper trails and databases.
Blockchain technology is a more efficient way to share and track compliance information across the supply chain – information that can't be falsified or changed once recorded.
- Secure Transfer of Data
One of the reasons why supply chain participants continue to operate through the exchange of emails and files, text messages and phone calls, is the desire to protect commercially sensitive information.
Supply participants want to be transparent, but they don't want to lose any competitive edge in the process. As highlighted already in some of the points above, blockchain solutions for supply chains can be structured in a way that protects sensitive information while providing the visibility and trusted transparency that effective and resilient supply chains need.
- Error Elimination
Manual processes are often required to ensure the flow of data and information that enables the product movements and financial transactions required in a supply chain. However, with manual processes come errors.
Blockchain technologies, such as IBM's TradeLens, automate many of these processes, eliminating errors.
- Improve Sustainability
Improving sustainability is a key priority for businesses in all industries, with a drive to do the right thing being accelerated by stricter regulations and consumer pressure.
Monitoring the performance of partners in the supply chain is a crucial part of the sustainability equation, but the traditional manual approach is inefficient and prone to errors and inaccuracies. Blockchain technologies ensure maximum transparency and oversight to monitor sustainability in the supply chain, as well as to identify areas for improvement.
The Perfect Fit
Blockchain technology can modernize businesses in a range of areas, but the supply chain is one of the most exciting. From a conceptual perspective, the blockchain is a perfect fit for the requirements of supply chain management, plus there are now advanced tools and platforms available that make rapid implementation viable.
From improving transparency and supply chain resilience to optimizing data, inventory, and financial flows, blockchain technologies are great for supply chains.
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