Every time you eat something or pick up your phone to call up someone or buy clothes from a shop, have you ever wondered as to where these products come from? Are you aware that every finished good or product that is ready for use has to travel a long journey right from the point of its’ origin till it reaches the customers? In other words, a chain of several interlinked elements also known as the ‘supply chain’ plays a significant role in delivering these products.
However, increased globalization has led to a more complex supply chain ecosystem, which has made it all the more difficult to manage it. While the management of supply chain has become an industry in itself with the industry witnessing a phenomenal double-digit growth year on year, there are several issues that continue to plague the industry.
Research report shared by Gartner reveal that the Supply Chain Management (SCM) market is expected to exceed $19 billion by 2021.
Listed below are few of the several challenges that has largely impacted the management of supply chains:
- Archaic Technology Infrastructure: The existing technology infrastructure used for managing the supply chain fails to fulfill the growing complexities and interconnectedness of the current supply chain ecosystem.
- Lack of Transparency: Fragmentation of data in silos within a supply chain ecosystem results in information asymmetry. This makes it all the more difficult to ensure the integrity of products moving across the supply chain leading to issues such as counterfeiting, contamination and more.
- Increasing Customer Demand: Customers today are more conscious about the quality and integrity of the product they are using. This has built additional pressure on the stakeholders who are now looking for robust solution that can do away with all the pain point of the supply chain ecosystem.
How Can Blockchain Streamline Supply Chain Management?
Since, Supply chain management includes planning, as well as the implementation of complex processes, it is important to ensure its proper implementation, which may lead to benefits such as increased sales and revenue, reduced frauds, and better product quality. While this might appear to be simple, maintaining a supply chain in reality is an extremely tedious task due to lack of proper connectivity amongst the different elements of supply chain.
Blockchain-A distributed ledger technology has turned out to be a game changer for managing the supply chain ecosystem. In fact, several leading players are leveraging the potential of this technology by implementing it in their business supply chain.
Sweetgreen, a salad chain, based out in the US has leveraged blockchain technology for managing their supply chain. According to company’s CEO Jonathan Neman, implementing Blockchain technology allows every participant of the chain to have access regarding the provenance, as well as the status of food item during its journey across the supply chain.
Following are the ways in which blockchain can be useful in the supply chain industry-
- Tracking Provenance: Multiple components and elements make a supply chain extremely complex. Consequently, it becomes very difficult to keep track of each and every record. This lack of transparency impacts the financial, as well the business reputation of the organization. With an iOT powered blockchain system in place, record keeping, and tracking provenance becomes easy since data regarding the product can be retrieved through the help of embedded iOT sensors and RFID tags. With such accurate provenance tracking, several fraudulent activities such as counterfeiting etc. can be eliminated.
- Cost Reduction: One of the major benefits of leveraging Blockchain in supply chain management is reduction in overall cost of the items in transit. This becomes possible because Blockchain does away with the need for intermediaries/ middlemen who otherwise consume a major chunk of revenue within a traditional supply chain ecosystem. With a Blockchain based system in place, risks pertaining to fraudulence, product duplicacy etc is significantly reduced while efficiency is improved.
- Increased Trust: The only way to streamline supply chain operations is by establishing trust amongst the participants of the supply chain. Since, records once uploaded on Blockchain is immutable, it cannot be tampered with. This helps in establishing trust amongst all the participants as Blockchain follows a consensus mechanism wherein consent from each and every participant is gathered before any sort of changes could be made.
- Increased Data Interoperability: One of the most interesting benefits of this technology is that it allows more data interoperability. This makes it simpler for businesses to share data with (manufacturers, suppliers, and retailers) each and every supply chain actor in a transparent way. Such a transparency helps curtail delays and disputes thereby ensuring smooth transition of goods across the supply chain. Since, products can be tracked in real-time, chances of loss and fraudulence becomes rare.
Quick Wrap Up:
The value of integrating blockchain technology can be understood from the fact that it offers the potential to link different ledgers while upholding the integrity of data amongst multiple supply chain participants. Furthermore, the properties of immutability and transparency make Blockchain a go to solution for managing the complexities of a supply chain ecosystem while maintaining its integrity.