How Blockchain is Modernizing Supply Chains

Image courtesy: Samsung

Why the Supply Chain Needs Blockchain

Potential Benefits

  • Better transparency: Blockchains include a permanent record of any transaction that has been included in a block. This means anything that any information reported to the blockchain from the supply chain will be permanently stored on the blockchain and can be accessed at any time — with essentially zero chance of manipulation. This makes it well-suited for situations where transparency is key to public perception, loss prevention, and cross-partner communication.
  • Improved efficiency: Firms can potentially dramatically improve efficiency in the supply chain by leveraging smart contracts and digital assets to carry out payments between supply chain participants and automate tasks that would otherwise require processing by a human — such as inventory counting and flagging unusual events. This not only helps to cut costs but also improves the speed at which items move through the supply chain.
  • Increased granularity: Blockchain, in combination with other technologies including RFID tags and IoT, could be used to dramatically increase the granularity of supply chains, allowing individual items to be tracked as they move throughout the chain. This can improve the auditability of supply chains while enabling manufacturers and retailers to demonstrate the provenance of individual goods. Moreover, it will allow firms to better take stock and adjust their manufacturing to better meet demand.
  • Reduced administrative costs: By automating many of the processes that are currently carried out manually — such as inventory tracking, verifying ownership, and processing payments — blockchain can help to reduce the amount of time and money that is spent on manual administration. This, in turn, can boost profit margins while eliminating sources of human error.
  • Improved compliance: By providing a transparent and permanent record of all supply chain activity, key individuals involved in the supply chain can easily track and verify the status of products and components, and identify any potential compliance issues at their source. Moreover, smart contracts could be used to automatically enforce compliance rules and regulations, increasing transparency and consumer trust, while protecting involved companies from the consequences of regulation violations.
  • Reduced counterfeiting/grey market trading: By using smart contracts and blockchain-based access credentials (e.g. on-chain identity), blockchain can be used to securely track the movement of goods through the supply chain and ensure that only authorized parties can access data related to the acquisition (suppliers), manufacturing (schematics and production techniques), and distribution (storage and transportation providers) of goods — thereby reducing the opportunity for counterfeiting and theft.

Recent Developments

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