How Blockchain is Revolutionizing Supply Chain Management? (EXPLAINED)
Like any chain, its performance depends on its weakest link. A supply chain can only ever be as efficient as its weakest link.
Blockchain can strengthen supply chains by providing end-to-end traceability, coordination, financing and improving security.
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Inventory Management
Blockchain can act as a decentralized ledger that eliminates bottlenecks and errors that plague supply chains by connecting warehouses, suppliers and production sites with distributors, retailers and consumers more directly and quickly. Furthermore, companies using it can more quickly reconcile purchase orders, invoices and payments more easily.
Pharmaceutical companies use blockchain with trucking companies to synchronize logistics information in real time and identify counterfeit or potentially harmful drugs more quickly. Furthermore, this allows companies to get paid almost immediately upon shipping products which helps increase cash flow while decreasing reliance on credit lines or expensive international payment processors.
Blockchain technology could transform supply chain management systems, cutting costs and increasing efficiency significantly. IBM and Walmart are leading players leveraging this emerging technology to streamline their supply chains – by minimizing execution costs while offering secure, transparent, tamper-proof transactions this technology takes supply chain management to new heights.
Smart Contracts
Blockchain can address one of the primary needs in supply chains: managing supplier relationships. Through its technology, supply chains can effectively and cost-efficiently handle onboarding, verification and payment settlement processes for suppliers.
If a pharmaceutical company discovers it shipped defective drugs to customers, their system can help trace these drugs back and identify all production and shipment batches associated with them in an efficient and accurate fashion allowing the firm to quickly recall these products from customers.
Blockchain allows companies to make instantaneous payments, cutting time and costs associated with international transactions. Ubisoft has taken full advantage of this, creating a blockchain-powered platform to allow players to trade rare NFT from its Rabbids franchise more easily. Dutch bank ING also recently introduced Fnality as a blockchain trade settlement protocol using smart contracts which automate trades without the need for intermediaries, thus decreasing risk and improving cash flow for suppliers and consumers alike.
Supply Chain Financing
Blockchain technology that powers cryptocurrency networks allows multiple parties to share information in an efficient, verifiable and safe manner – something supply chains could benefit from as it makes collaboration simpler and reduces risks.
Companies using RFID tracking solutions can improve compliance standards when shipping perishable products such as food and drugs, while tracking shipments back to their origin. RFID technology also assists companies in increasing visibility throughout their supply chains to reduce costs while improving visibility for consumers.
Companies using blockchains can optimize logistics tasks and enhance business relationships more effectively by managing warehouse inventory more efficiently and improving demand forecasting, streamlining processes, eliminating paperwork faster, and quickly resolving issues more effectively.
Blockchain can also assist companies in accessing financing more easily. Thanks to its secure nature, financial institutions can rely on its detailed track record in order to extend credit. In turn, this allows suppliers to get paid early and improve working capital while also accessing supply chain finance – usually less costly than factoring – which helps alleviate cash flow constraints and avoid cash flow constraints altogether.
Supply Chain Security
Blockchain’s unique, tamperproof structure facilitates traceability from raw materials to finished products, giving companies access to this technology as they work to eliminate counterfeit or dangerous goods from their inventory. Furthermore, ethical sourcing demands can also be met using this innovative solution. DeBeers uses blockchain’s Tracr app to track every natural diamond it mines. This enables it to address consumer concerns regarding ethical sourcing while increasing efficiency. Walmart has taken an interest in blockchain, piloting multiple Hyperledger Fabric programs that span from tracking mangoes to uncovering pork products – using this digital innovation to improve transparency and traceability in its supply chains.
Supply chains that want to thrive must operate in an ecosystem that trusts them, such as creating private blockchain networks that are only accessible by known parties and outlining clear rules regarding data sharing, encryption, management and dispute resolution.
