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The supply chain industry has grown a lot over the years, becoming really big and complicated worldwide. That’s not surprising, given how much globalization has increased. But even with all this growth, there are still big problems with trust and tracking where things come from. Luckily, using blockchain in the supply chain is helping a lot. It’s making things easier and more economical for businesses. Blockchain could be the answer to these trust issues in the supply chain. It’s like a digital ledger that keeps track of every step of a product’s journey.
By using blockchain, the supply chain could be transformed into a more efficient, trustworthy, and sustainable system.
As blockchain gets better and the rules around it become clearer, it will completely change how we track and understand things moving through the supply chain. in this article, we’ll talk about how the supply chain works and how using blockchain could make it better. We’ll start by explaining the current situation and then dive into how blockchain can help.
What Is Blockchain-Enabled Supply Chain?
A blockchain-enabled supply chain revolutionizes management by creating a transparent and secure system. Imagine a shared digital record book accessible to everyone involved, from raw material suppliers to retailers.
Every step a product takes, from its origin to its final destination, is documented on this blockchain ledger. This transparency allows all participants to track the product’s journey in real-time, ensuring authenticity, identifying potential problems, and streamlining processes. By eliminating the need for paper trails and middlemen, blockchain fosters trust and efficiency within the supply chain.
Transparency by blockchain offers many benefits. It can help identify counterfeit goods, improve food safety by tracking outbreaks, and even ensure ethical labor practices are followed throughout the process. Blockchain is revolutionizing supply chains by making them more efficient, trustworthy, and sustainable.
How Does Blockchain Work in Supply Chain Management?
Blockchain is a revolutionary technology that can improve supply chain management by offering a secure, transparent, and efficient way to track goods and information. Let’s understand how blockchain works in supply chain management:
1. Data Input
Each participant in the supply chain (suppliers, manufacturers, distributors, retailers) adds relevant data about a product to the blockchain ledger. This data can include things like origin, materials used, processing steps, location, and ownership changes.
2. Distributed Ledger
This data isn’t stored on a single server; instead, it’s replicated and cryptographically secured across a network of computers maintained by all participants. This distributed nature ensures data integrity and prevents tampering.
3. Immutable Record
Once a piece of data is added to the blockchain, it cannot be altered or deleted. This creates an immutable record of the product’s journey, fostering trust and transparency. This immutability allows for complete transparency throughout a product’s journey. You can track the movement of goods from raw materials to finished product, knowing exactly where it came from and who handled it at each stage.
4. Smart Contracts
These are self-executing contracts written in code that reside on the blockchain. Smart contracts can automate specific actions within the supply chain when predefined conditions are met. For example, a smart contract could trigger a payment to a supplier only after a product reaches its destination.
5. Real-Time Tracking
All participants can access the blockchain ledger to track the product’s movement in real time. This provides valuable insights into inventory levels, potential delays, and overall supply chain efficiency.
Blockchain In Supply Chain Key Market Takeaway
Source: Verifiedmarketresearch
The market data shows how fast the role of blockchain in the supply chain is growing.
However, here are more stats indicating the potential of blockchain in supply chain management
- According to a survey by Deloitte, more than half (55%) of the people asked said their company will be affected by blockchain technology.
- By 2025, 1 out of every 5 top global grocers will use blockchain to make sure food is safe and can be traced back to its source.
- In a survey by MHI, 70% of bosses think blockchain will shake up supply chains by 2022.
- According to a study by Juniper Research, using blockchain could save $31 billion by 2024 by stopping food fraud.
- The World Economic Forum thinks that by 2027, about 1 in every 10 dollars of the world’s money will be stored using blockchain.
- In a PWC survey, about a quarter (24%) of big bosses said they’re working on bringing blockchain into their supply chains.
- Seventy percent of workers think that blockchain could really change how they deal with physical stuff in the supply chain.
- IBM and Walmart used blockchain to cut the time it takes to track a piece of food from 6 days down to just 2.2 seconds.
- Gartner says that by 2025, the extra value blockchain brings to supply chain businesses will be worth more than $176 billion.
- IDC thinks companies will spend nearly $15.9 billion every year on blockchain by 2023.
- Statista says that roughly a quarter (23%) of people believe blockchain can really help cut down on food fraud.
How Blockchain Solves the Many Traditional Supply Chain Issues?
Traditional supply chains face several hurdles that can significantly impact businesses. Here’s how blockchain technology tackles these challenges:
1. Lack of Shared Database
Blockchain establishes a single source of truth. All participants share a secure, tamper-proof ledger, eliminating communication gaps and fostering trust.
2. Difficulty in Tracking Assets
Blockchain enables real-time tracking and tracing of goods throughout the supply chain. Every movement is documented, making it nearly impossible for counterfeiting or product swapping to go undetected.
3. Wasteful Spending
By eliminating redundant data collection and record-keeping across teams, blockchain promotes efficiency and cost savings.
4. Slow Quality Checks
Blockchain facilitates faster and more accurate quality control. The immutable record allows pinpointing the source of issues like damage or product alteration much quicker.
5. Failing to Meet Customer Demands
Increased transparency and real-time data from blockchain empower businesses to be more responsive to customer demands. They can adapt production and distribution to meet fluctuating needs. In essence, blockchain transforms supply chains from opaque and inefficient systems to transparent and collaborative ecosystems, ultimately benefiting businesses and consumers alike.
Business Advantages Of Using Blockchain In Supply Chain
Blockchain is like a digital ledger that tracks transactions and makes it super secure and transparent, which is great for businesses, especially in supply chain management. Now, let’s understand why it’s so beneficial for supply chains.
1. Real-time tracking
A supply chain system that uses Blockchain is transparent and decentralized, which means you can easily see what’s happening at any time. Real-time tracking helps not only in manufacturing but also in making the industry transparent.
2. Enhanced Processing Speed
Supply chains can deal with big and complicated data, but some parts, especially those in lower tiers, need to be faster and still use lots of paper—a common process in shipping. Having intermediaries makes things even slower. But if we use Smart Contracts and Blockchain, we can speed things up by getting rid of these middlemen and the need for paper.
3. Strengthening traceability
Increasing interest and rules about knowing where products come from are causing big shifts in how supply chains work. Using blockchain in the supply chain helps track things better, which reduces the expensive problems caused by bad quality, like damage to reputation, product recalls, and losing money because of fake or illegal goods.
4. Building Stronger Customer Relationships
Blockchain lets people learn all about the product they’re using, which is really helpful in managing orders and making it simple for customers to track their orders. Customers can also check if their products are real, building trust between customers and brands.
5. Increased Return on Investment (ROI)
Blockchain technology is playing a crucial role in enhancing the reputation of businesses within the decentralized market. By utilizing blockchain, companies can establish a more trustworthy image, which ultimately leads to greater consumer confidence and loyalty. The increased trust not only strengthens the brand’s standing but also contributes to higher returns on investment (ROI)
6. Effective traceability
Using blockchain in the supply chain makes it easier to manage licenses and ownership. Smart contracts help ensure accurate licensing of services, software, and products. Plus, blockchain provides consensus, meaning there are no disagreements about transactions recorded on the chain. Everyone involved in the blockchain has the same record of ownership, making it possible to track ownership records effectively.
Examples Of Businesses Using Blockchain In Supply Chain
Companies from many industries are already combining blockchain technology with supply chain management to create new systems. These blockchain-based supply chain management systems offer several advantages. Here are a few examples of how blockchain is being used in supply chains:
1. SkyCell
SkyCell uses blockchain to develop intelligent refrigerated containers for transporting medicines. These containers are fitted with IoT sensors that keep track of the drugs’ location, temperature, and humidity in real-time, regardless of their location globally. The system uses blockchain to log these details and store all logistical documents for each container digitally. The information cannot be tampered with or deleted, serving as reliable evidence.
2. Bumble Bee Seafoods
Bumble Bee Seafoods wants to make sure you know exactly where your tuna comes from. Using a special technology called blockchain to track its journey, all you have to do is scan the QR codes on the bags of tuna with your smartphone. With tracking, you can see every step it took from the ocean to the shelves of your local store.
3. Brilliant Earth
Brilliant Earth sells diamonds that come from ethical sources. They use blockchain technology to track where their diamonds come from and to ensure they’re responsibly sourced. By using a blockchain database, Brilliant Earth follows the entire supply chain and keeps all the important documents, like invoices and certifications, safe and secure.
4. Nestlé
Nestlé wasn’t involved in the baby milk problem, but it still hurt their business. To do better in China, they started using blockchain. Blockchain technology tracks where baby formula goes until it’s in stores. People can use their phones to scan a chip on the formula box and show what’s inside, where it came from, and who made it.
5. Walmart
Walmart, the big store, has used blockchain tech in its food supply chain to make it easier to see where food comes from and how it’s handled. The company is using it to track where their pork comes from in China to make sure it’s safe and to check if a farm sold any bad pork to a certain place.
Use Cases Of Blockchain Technology In Supply Chain
Blockchain enhances supply chains in many ways, and companies use it in different parts of their supply chain. Let’s explore some use cases where businesses are using blockchain in the supply chain:
1. Logistics
Smart contracts in blockchain tech help verify, record, and manage transactions without needing third parties, which could make global supply chains less complicated. Companies like DHL are considering using blockchain for their logistics operations.
2. Lowering Costs
Blockchain technology enables businesses to conduct transactions seamlessly across borders without the need for intermediaries. By bypassing these intermediaries, such as banks or payment processors, businesses can save both time and money. Cost reduction can be done by reducing the associated costs that arise from intermediary steps in traditional transaction processes.
3. Regulating Product Recall
Blockchain technology is really helpful for supply chains when it comes to managing product recalls. It works like a super detailed map, showing exactly where each product is at any given time. So, if there’s a problem with a product, like a safety issue, companies can quickly figure out which ones are affected and where they are. Because everything is so clear and easy to follow, it costs less money and takes less time to complete.
4. Post-sale Services
Using blockchain to digitize product information can make warranties and maintenance after purchase more reliable and manageable. When a buyer checks the product’s digital identity, the warranty can begin right away. Digitalizing product information also helps people buying used products feel more secure when they check the item’s details.
5. Maintaining Ethical Standards
Today, people pay close attention to the ethical standards they want businesses to follow when they buy their products. They like brands that share their values of being eco-friendly and having a clear purpose. Before making a purchase, consumers check out a company’s actions on environmental, social, and governance issues.
Emerging Technologies For Enhancing Supply Chain Management With Blockchain
New technologies like AI and Blockchain are making supply chains work much better. Let’s see how these innovations are making things more efficient!
1. Artificial Intelligence (AI)
The merging of Blockchain and AI brings about a way for Blockchain to handle data more simply and efficiently. Additionally, it enhances security within the system by utilizing predictive analytics. Moreover, it enables scalability to improve, making it easier for the system to expand and handle increasing demands.
2. Beacon Technology
Beacon is another tech that will make Blockchain even more useful in managing supply chains. The Technology lets companies inform everyone about their product’s current status in real-time, which will build trust in the process among coworkers and users.
3. Internet of Things (IoT)
Combining IoT with Blockchain, also known as the Blockchain of Things, will enhance its role in the supply chain, warehouse, and logistics field. These two technologies will work together to help monitor every step of the process in real time and alert connected devices if any issues arise.
Industries Where Blockchain Is Widely Used For Supply Chain
Blockchain is used a lot in different industries to make supply chain operations better by making things easier to see, follow, and make sure they’re following the rules. Some big companies like IBM, Walmart, FedEx, British Airways, DHL, and Nestle use blockchain to manage their supply chains. Let’s look at some ways blockchain helps in supply chain management.
1. Food and Agriculture
Blockchain technology is helpful in food and farming because it solves problems like making sure food is safe, tracing where it comes from, and showing how it’s made. Blockchain keeps an unchangeable record of every step from the farm to your plate. This way, people can easily find out where their food comes from. It also encourages farmers to be responsible.
Example: IBM
IBM Food Trust platform lets food companies follow their products as they move through the supply chain. Everyone involved can see this information, making things more transparent. Also, blockchain can watch over how food is made, moved, and stored.
2. Healthcare
The healthcare field is using blockchain technology to solve problems like making sure data is accurate, keeping patient information private, and tracing where drugs come from. With blockchain, healthcare groups can follow drugs, medical tools, and supplies from when they’re made until they reach patients.
Example: Mediledger
Mediledger is a company that uses blockchain to follow prescription drugs. The process ensures that patients get the right medicine and that fake drugs are stopped. Overall, blockchain helps protect patient information, makes drugs safer, and makes managing supplies in healthcare easier.
3. Retail
Blockchain technology has really changed how stores work. It helps with problems like fake products, slow supply chains, and making customers trust the products. Besides helping track things better, blockchain also makes it easier for stores to know what they have in stock, which means they can refill things faster and avoid running out of products.
Example: Walmart
Walmart has implemented blockchain technology in its supply chain management to enhance transparency and traceability. By utilizing blockchain, Walmart can ensure that the products it sells are authentic and not counterfeit, thus addressing the issue of fake products.
4. Automotive
In the automotive industry, blockchain makes things easier by organizing the connections between suppliers, makers, and sellers, cutting down on paperwork and tasks. Smart contracts handle different jobs like payments and checks, making teamwork smoother.
Also, with blockchain, car makers can follow a car’s whole journey, from getting materials to making it and giving it to the buyer.
Example: BMW
BMW uses blockchain to follow where cobalt comes from, a material used in electric car batteries. Tracking the origin of cobalt helps ensure that the cobalt is mined properly and doesn’t come from places with conflict.
Conclusion
Blockchain technology affects how supply chains work. Many tasks like paperwork and payments can be automated with blockchain, streamlining operations and reducing administrative costs.
Also, blockchain in supply chain management opens doors to exciting innovations like secure data-sharing platforms between partners to improve collaboration with the best approaches. To make it work well in your supply chain, you need to stay updated on the latest trends in blockchain.
You should also look into hiring the best companies that specialize in developing blockchain technology. They can help make using blockchain in your supply chain easy and profitable.
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FAQ
Q. What is the blockchain in supply chain management?
A. Blockchain in supply chain management refers to the integration of blockchain technology into the tracking, verification, and management of goods as they move through the supply chain. It offers a decentralized system that enhances transparency, traceability, and security in supply chain operations by recording transactions in a tamper-proof manner.
Q. How is blockchain used in logistics?
A. Blockchain is used in logistics to streamline processes, enhance transparency, and improve trust among participants. It enables real-time tracking of shipments, facilitates automated verification of documentation, and ensures the integrity of data across multiple parties involved in the logistics network.
Q. What is an example of a blockchain supply chain?
An example of a blockchain supply chain is the use of blockchain in the food industry to bring foods from farm to table. Companies like Walmart and IBM have implemented blockchain solutions to track food items such as mangoes and pork, enabling consumers to scan a QR code and view detailed information about the product’s source, production, and transportation history.
Q. How can blockchain improve any supply chain system?
A. Blockchain can improve any supply chain system by providing increased transparency, traceability, and security throughout the entire supply chain network. By recording transactions in an immutable ledger, blockchain reduces the risk of fraud, counterfeiting, and errors.
