How can Blockchain Transform the Supply Chain Industry
The distributed ledger technology of blockchain is creating an unimaginable frictionless future to combat redundant efforts of traditional business networks. Encompassing characteristics such as decentralization, automation, immutability and transparency, Blockchain is transforming various industries — supply chain being one of the industries to embrace its potential benefits.
The global supply chain affects the overall economy of any nation as it connects several networks into a common platform. The supply chains are badly tracked and are in the inefficient phase that usually hypes up transportation costs. At times, their conduct becomes exploitative and may even mishandle or mislabel the products which may even further complicate the things. So the answer is blockchain solutions at enterprise scale to streamline the movements for all the stakeholders of the supply chain.
Benefits of blockchain in Supply Chain Management
Blockchain technology allows easy and accurate tracking of assets with a simple use of smart contracts that enhance the experience for the clients. Integration of these two industries brings in the following benefits:
- Transparency of transactions as end-to-end encryption of source point and consumption is initiated
- Accurate and reliable tracking of assets
- Enhances the licensing of services, software or products
Earlier, paperwork in the container industry accounted for up to half of the cost of transportation. A study conducted by an international ocean advocacy organization, Oceana, from 2010 to 2012 in the USA revealed that up to 87% of times seafood is badly mislabeled. Due to bad tracking of assets in the supply chain, many organizations rely on child laborers to extract elements or chemicals from illegal mines. Additionally, a report by PwC in 2015 stated that approximately 2% of global economic outputs result from the counterfeiting revenues which are usually in the sectors of pharmaceuticals, electronics, consumer goods and luxury brands.
Thus enterprise blockchain solutions development enhances transparency and traceability of transactions. It will be easier to imply accountability and responsibility for the movement of goods and services.
Use-cases of blockchain in supply chain management
Blockchain in the supply chain can transform the entire mechanism with these following use cases:
Role of blockchain technology in enhancing traceability of products
Traceability involves efficiently charting and conceptualizing the flow of enterprise supply chains. As the demands of consumers from overseas have started rising, it is becoming beneficial for organizations to install blockchain solutions to verify the tracking of assets to maintain verifiable and immutable data.
Blockchain assists in reducing counterfeit activities and further allows for a smooth flow of products. Raw materials or products are facing losses in terms of sales, replacement costs and lawsuits. Through blockchain, the manufacturers will be able to allocate products efficiently and economically to the millions of individuals worldwide. It facilitates transparent and faster traceability of processes.
According to a Global Brand Counterfeiting Report of 2018, online counterfeiting accounted for 323 Billion USD in the year 2017. Blockchain makes the process transparent by verifying the actual source of the item accurately and separately. This minimizes the chances of frauds and further enables a proper record keeping.
Role of blockchain technology in improving the transparency of supply chain
Transparency is an important element that keeps all the transactions in line. Blockchain technology allows transparency of transactions as once it has been registered, it becomes immutable.
According to the World Economic Forum, the use of distributed ledger technology on behalf of traditional processes could increase the trade volume by 15% and GDP by 5%. Smart contracts enable a smooth operation of asset tracking with accurate maintenance of information. Anyone can easily scrutinize the processes in real-time. Blockchain technology helps in adhering to a complete set of compliance with the reporting standards. As in this, the processes are not carried out manually so it improves efficiency, reduces friction and minimizes the chances of error in the activities.
Role of blockchain technology to bring in tradability of the supply chain
Blockchain in tradability improves the traditional concept of the marketplace. Tokenization of assets is possible only through a DLT platform wherein an asset is divided into a number of shares to digitally represent the ownership status. It signifies the stake of shareholders and enables them to easily trade them without shifting the ownership status to another person.
Blockchain works on a consensus algorithm wherein licenses and ownerships are maintained efficiently. Even past owners in the supply chain can be checked and verified through this mechanism. All entities work in a coordinated manner as there is no possibility of disputes in the chain.
Blockchain technology facilitates asset tracking and enables proper alignment of licenses of products, services or software. The technology can be applied to any logistics department to make the processes error-free and economical for all the parties in the supply chain.
If you are planning for enterprise blockchain solutions development to integrate blockchain in your supply chain mechanism, then we can help you in navigating your business in the right direction. We provide complete solutions — right from identifying blockchain use-cases to development and implementation of the blockchain solution.
We are available for a free consultation to discuss your business needs. No obligation, just a friendly chat to see how we can help you accomplish your business goals.