Securing Automotive Supply Chain with a Blockchain Based Solution

The automotive industry is moving quickly towards an era of intense change. In fact, the future of this industry will be starkly different from that of today and will soon be more than just an industry about vehicles. However, the current industry landscape is exposed to certain challenges such as counterfeiting, lack of transparency, inefficient recall management and more. These challenges have pushed businesses to fine-tune their supply chain strategies and operations, as an optimized supply chain can prove to be a critical element that can set businesses (automakers) apart from their competitors.

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How is BlockChain Contributing to the Efficient Management of Pharma Supply Chain?

The Life Sciences or Pharmaceutical industry has been struggling to deal with the challenges related to drug counterfeiting and ineffective supply chain management. Apart from this, it is also combating the high cost of bringing new drugs to the market, along with new standards. As a result, preventing theft, counterfeiting and forgery, while minimizing cost and improving compliance has become the utmost priority for pharmaceutical and biotech companies. To remain competitive, businesses require adopting a game-changing technology that can resolve most, if not all the current issues associated with compliance and traceability.

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Blockchain Disrupting Supply Chain Finance

Blockchain, the underlying technology behind Bitcoin has established itself to be beneficial for plethora of industries. To start with, it has revolutionized payments and settlements in the financial domain. Following that, it is impacting other areas of finance like lending, wealth management and insurance. Out of this, Supply Chain financing forms an interesting use case as it is part of Supply Chain Management (SCM) which itself is undergoing major disruption.

Blockchain?

Blockchain is a chain of transaction records in a database like a financial ledger. The transactions are recorded in the database using digital encryption to augment the security. For more about Blockchain, follow this post.

Blockchain adds trust to the network of users owing to features like immutability and transparency.

Challenges in existing Supply Chain Financing process

The traditional supply chain financing process is marred with manual work and inefficiencies. If we talk about Vendor Financing process, it depends largely on the invoice generated by the seller and approved by the buyer which is then submitted to lender for discounting. Since multiple parties are involved each with its own separate database, the chances of fraudulent invoices and double spending of invoice increases.

Secondly, in Vendor Financing, the payments are made to Seller by lender against the invoice whereas the repayments are taken from Buyer. This process is largely offline today increasing chances of delayed or missed payments.

Additionally, Buyer at times take a huge time to approve the invoice leading to delayed financing to the Seller which results in further cost pressure to the Seller.

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Supply Chain Financing with Blockchain

Blockchain along with the use of Smart Contracts can streamline the incumbent supply chain processes.

  1. The Blockchain will centralize the ledger so that information of critical documents like invoices, GRN etc are written securely to Blockchain and accessible to all the relevant parties in real-time.
  2. The payment disbursal to the Seller and repayment back from Buyer can be automated using Smart Contracts that will trigger automatically based on pre-defined events.
  3. SLAs can be written on Blockchain in the form of Smart Contracts to reduce the inefficiencies at various stages leading to timely financing to the Seller.

So, as we see Blockchain helps both the Buyer and Seller to manage their working capital requirements as well as lender to prevent fraudulent invoices and double spending.

Sofocle Technologies has built a Blockchain based solution for Supply Chain Financing. For further details or consultation, Contact Us.