Transforming the Supply Chain Industry using Blockchain
Managing today’s Supply Chain, which includes production and distribution of products is a labyrinthine. Varying from industry to industry, supply chain can include extraordinarily complex and multiple stages, different locations, legion invoices and payments. All of this can extend over months of time. As today’s supply chain is full of complications and lacks in lucidity, blockchain can play a salient role in developing modern supply chain and logistics industry.
Challenges in the current Supply Chain
The 100-year history of supply chain management began with improvements of basic, labor-intensive processes and progressed to current day engineering and complex international networks. Shift of manufacturing sites to other developing countries e.g. China, where labor is cheap, has made Supply Chain more complicated. This lack of opacity in the system has made it difficult for the buyers to know the true value of the products.
Similarly, prohibited or unethical practices are extremely difficult to investigate in supply chains. Lack of connectivity e.g. who needs what, when and how, between vendors-suppliers make it highly inefficient.
What is Block Chain and how it can improve Supply Chain
Incontrovertibly, blockchain is ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. Since its introduction, blockchain has evolved into something greater. Originally devised for the cryptocurrency, Bitcoin, the tech industry is now finding other potential uses for the technology.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Don & Alex Tapscott, authors Blockchain Revolution (2016)
Blockchain can be used for payments, agreements, exchange and even for tracking. Transactions are highly transparent as every transaction is recorded on block and on multiple ledgers distributed over different computers. It is extremely efficient, scalable and highly secure as each block is linked with one before and after it. Also, there is no central authority over the block chain. Eventually, blockchain has capability to make supply chain more efficient and transparent and impact on everything from warehouse to delivery to payment, positively. Chain of command is essential for many things, and blockchain has the chain of command built in.
Blockchain provide the very things necessary for reliability and probity of supply chain. The blockchain network lives in a state of consensus, one that automatically checks in with itself every ten minutes. Everyone on the blockchain can see the chain of ownership for an asset on the blockchain.
It is impossible to erase the records on the blockchain which is important for transparent supply chain.
Blockchain in Industry Today
Blockchain has made it possible to transfer money anywhere in the world without using traditional banking system, hence making it very convenient to the supply chain that is globalized.
Recently an Australian vehicle manufacturer, Tomcar has started paying its vendors through Bitcoin. Some food giants like Nestle, Tyson, Dole and Unilever also use blockchain for similar purposes. Diamond-giant De Beers uses blockchain technology to track stones from the point they are mined right up to the point when they are sold to consumers. The transparency of blockchain is also crucial to allow consumers to know they are reinforcing companies who they share the same values of environmental stewardship and sustainable manufacturing.