A lot has been written about blockchain potential to revolutionize businesses in many industries. But when looking at the potential of blockchain in supply chain, the decentralized nature of the technology makes it appealing to help improve transparency, increase efficiency, and reduce paperwork.
For supply chain, this could mean better visibility and greater transparency across all levels in the logistics network.
Providing Greater Transparency
In the past few years, we have seen an increasing focus on ethically sourced products, with more consumers demanding to know the origin of the products they purchase and how it was sourced. However, many current systems sometimes struggle to track products back to their manufacturers, and as a result, companies fail to meet consumers’ demands for transparency. A distributed ledger system provides the best solution to this complex challenge.
Blockchain technology is already in use in the area of transparency, with some implementations already deployed, and a few more in the pipeline. With blockchain, it is now possible to create and maintain a fully transparent and immutable log of supply chain activities for greater accountability and operational transparency. Providing greater transparency in the supply chain is critical in improving trust between retailers and end customers, something that pharmaceutical and food traceability blockchain solutions are pursuing to achieve among others.
Driving Supply Chain Visibility
One of the biggest challenges — supply chain visibility — is a major sticking point for businesses as well as modern consumers. Globalization, competition, and growing complexities in the marketplace have made it more difficult for companies to get a handle of their supply chains. There’s also an additional pressure to meet consumers’ growing demands for shorter cycle time, quick deliveries and error-free shipments.
With the developments of blockchain in supply chain in the last few years, the transformative technology has become an increasingly valuable tool for companies in terms of supply chain visibility because it offers transparent and more efficient mechanism for recording transactions and managing inventory. Distributed ledger technology has the ability to instantly and immutably store information, track the journey of the given good in detail, as well as identify SKUs, enforcement timelines, and measuring units, helping businesses to have a single view of the supply chain.
This enhanced visibility enables companies to spot inefficiencies in the network, eliminate middlemen, and exert greater control over every facet of their logistics operations. Indeed, enhanced visibility in the supply chain translates into fewer shipping errors, less missed deadlines, lower operational costs, and improved customer service.
Blockchain Project Disrupting the Supply Chain
There have been plenty of supply chain blockchain pilot projects launched around the world with a few of them getting a lot of attention thanks to their early success and promising results. One of these projects is VeChain, a Singapore-based blockchain firm providing a supply chain management platform with the goal to improve visibility and efficiency in the global supply chain. More importantly, the platform enables recording and storing of data, giving producers and consumers confidence in their products and restoring trust to the supply chain system.Thanks to successful integration of blockchain with NFC, RFID and QR technologies, retailers and customers will be able to know exactly where and how their products are being made.
VeChain has already established strategic partnerships with a number of leading firms, including People’s Insurance Company of China, UAE’s cloud services provider BIOS, Japanese tea producer Fuji Marumo as well as well as a leading Chinese energy and gas companies.
TradeLens is another promising project actively exploring blockchain solutions for competing in this burgeoning market. Built by IBM and Maersk, TradeLens supply chain solution seeks to increase efficiency, reduce costs, and streamline the global supply chain though it is more focused on larger shipping lines and logistics.Using blockchain smart contracts, TradeLens enables digitization of trade data, allowing supply chain participants to cut costs, reduce shipment time and streamline workflows. The platform, which is currently growing at a rate of $1 million events added to the ledger per day, has been praised for promoting the adoption of blockchain technology by global port operators and terminals.
Some of TradeLens platform members include Port of Philadelphia, Port of Bilbao, Port of Valencia, Port of Halifax, PSA Singapore, Modern Terminals Limited, PSA Singapore, among others.
There’s little doubt that supply chain, being a key component of our world’s economy, should be one of the sectors that experiences the most impact of blockchain revolution. Because of its inherent benefits, blockchain can shake things up by improving companies’ business models and transforming the entire industry. It will help businesses re-invent their supply chain and employ systems that are cost-effective, fully transparent, and more reliable than existing solutions.