Blockchain in Supply Chain: Nowadays, managing supply chains is insanely complex. The supply chain can span over several stages, several geographical locations, a multitude of payments and invoices – all depending upon the product. Also, they can have many individuals involved, and it can extend overtime. Due to this, there is an increasing interest in blockchain in supply chains.
Complexity in Supply Chains
Supply chains are broken in many ways. These were relatively simple a long time ago, because of the local commerce. Over the last few years, they have grown exponentially and have become complex. Manufacturing has become globalized, and a lot of things are manufactured overseas, our supply chains have become quite complex.
It has become quite hard for customers to understand the value of products, because of the lack of transparency in our system. Also, it’s hard to investigate supply chains given the suspicion of unethical or illegal practices.
Blockchain in Supply Chains
The most popular use of blockchain technology is in the cryptocurrency, such as Bitcoin, Ethereum. However, it doesn’t stop at that. Since blockchain is a distributed ledger with several applications, it can be utilised for any exchange, contracts/agreements, tracking, and payment. Every transaction is recorded on the block, and across several copies of the ledger, hence the nature of transactions becomes transparent.
Blockchain in supply chains is also highly secure since each and every block links to the block before and after it. Moreover, since there isn’t a central authority to govern it, it becomes extremely scalable and efficient. Blockchain in supply chains can increase transparency and efficiency with ease and can impact everything – warehousing, delivery, and payment.
The two most important things needed in supply chains are integrity and reliability, and blockchain sufficiently provides these. It also provides consensus – meaning, there won’t be any dispute in the chain concerning transactions, as all entities will have the same type of the ledger. So everyone on the blockchain can easily see the chain of ownership for a particular property on the blockchain. Moreover, records can’t be erased on the blockchain. This further provides more transparency.
Examples of Blockchain in Supply Chain
Blockchains allow transfer of funds anywhere in the world without the help of any traditional bank. It is for this reason alone that it is immensely convenient for a supply chain, which is globalised. Australian vehicle manufacturer Tomcar, for instance, pays its suppliers through Bitcoin.
When it comes to the food industry, it’s important and imperative to have authentic records to trace each and every product to its source. For example, Walmart uses blockchain in supply chain to keep track of its products, primarily pork, which it sources from China. Blockchain records where the meat came from, stored and processed, and also its sell-by-date. Other major companies that use blockchain are Nestle, Unilever, Dole, and Tyson.
BHP Billiton, world’s most prominent mining firm, recently announced it would use blockchain to record and track data with its vendors relating to mining processes. This will allow the company to have better effective communication with its partners.
Furthermore, Diamond giant De Beers makes use of blockchain technology to keep track of stones – right from the point they are mined to the point they are sold to the customers. This helps the company avoid the conflicts, thereby assuring the customers they are purchasing genuine diamonds.
Blockchain in supply chain can inevitably transform the logistics and supply chain industry in the most efficient way possible.