Looking at blockchain at its current state, it becomes pretty clear that at one point or the other, it is going to see a surge in its usage in the supply chain. Particularly for driving supply chain transparency up.
The supply chain has been that one area where opportunities present themselves time and time again for gradual improvement. Blockchain is no exception: it has the potential to improve traceability and transparency while reducing the administrative overhead at the same time.
A blockchain-based supply chain can help everyone that partakes in the process to record measurable analytics that can help manage the supply chain effectively:
- And much more
The ever-present nature of this information on a blockchain is a counter to many contemporary problems: traceability of material, counterfeiting, compliance problems, curbing grey market, and responsible manufacturing.
Source: Deloitte, blockchain & supply chain
Ever since the first implementation of blockchain, the Bitcoin, financial services have been experimenting right and left with blockchain. As early as 2015, Chain, a blockchain startup co-ventured by NASDAQ and OMX Inc was launched to test share trading on the private market. Meanwhile, Visa, Commonwealth Bank (Australia), Royal Bank of Scotland and a score of UK’s high street banks have all announced that they’re coming up with their own proof-of-concept based on blockchain.
Leverage our case studies to know more about how we can help your business utilize blockchain
So what are the main benefits of using blockchain in a supply-chain context?
- Improve traceability of the supply chain to make sure set standards are met
- Reduce losses from counterfeiting
- Ensure compliance in case of overseas manufacturing
- Decrease paperwork and administrative overhead.
Blockchain ledger is safe because each block of transactions links back to the previous annotated block, making tampering impossible.
Are there any secondary benefits to using blockchain in the supply chain?
- Improve corporate reputation by only sourcing out the right materials used in production.
- Provide the public with credible data sharing
- Decrease chances of PR risk arising from malpractices.
- Improve stakeholder confidence.
Blockchain & Supply chain can provide better end-to-end tracking in certain scenarios. Organizations can put the records of their assets on a digital ledger thereby creating decentralized (and most importantly immutable) transactions from production to receiving by end-user. This is only possible via the increased transparency that blockchain provides.
Worldwide Blockchain in the supply chain market is valued at $253 million (2020 figures)
Using blockchain can reduce fraud specifically in industries that are either critical or have had a track record of problems in supply chain: pharmaceuticals and diamonds. It could also help companies understand how materials go to every contractor and where the profit-margins can be increased.
Aside from increasing profits, blockchain puts spotlight over quality control as well. Businesses can now gain more control over outsourced manufacturing (which is more susceptible to quality laxation). With all the parties having access to same information, there is less chance of erroneous communication. In turn, less time is spent on validating data and more on the business side: performing services and delivering goods.
One added benefit is the streamlining the entire process and cost overheads by putting an effective audit of the supply chain data. The same data, if done by conventional methods, would take weeks to audit for compliance. This all is accelerated due to the digital ledger.
Nearly 90% of U.S. & European banks have started active development on blockchain by 2018.
Blockchain is gaining momentum day by day and corporations as well as grass roots startups have their eye on key industry players by now. There’s also a catch: there needs to be a critical mass gathering in a supply chain. After a certain point, it will be easier for everyone to jump abroad the blockchain for supply chain. Companies that are paying keen attention to the ongoing market trends to know when the time is ripe to develop their own blockchain prototype.
Still want to know more about how blockchain can help your business’ supply chain run better, efficiently and cut costs? Reach out to us here and we’ll get back to you shortly.
Get to know more about Blockchain by reading these easy-to-understand infographics.