Blockchain in Supply Chain Management: Optimizing Transparency and Efficiency

1. Nations are anxious about cooperation

More than six out of ten global enterprises anticipate that geopolitical unrest will negatively influence their supply chains in the next three years.  

As a result, governments and business leaders are attempting to establish ‘friend shoring’ connections – trade linkages with like-minded and most likely, geographically adjacent nations (‘nearshoring’) where product supply will be more secure.

2. Cybercriminals are expanding their operations

Almost half of global enterprises see cyber security as a significant operational problem for their supply chains over the next three years.

3. Unstable material access

Raw material costs are cited as the top supply chain challenge by 71% of global enterprises in 2023.

4. The manufacturing footprint is evolving

More than seven out of ten enterprises that announced a manufacturing site transfer between 2018 and 2023 relocated operations to Asia.

5. The retail and distribution supply networks are changing

Meeting consumer expectations for speed of delivery is viewed as a primary driver influencing the structure and flow of supply chains by 67% of firms during the next 12-18 months.

6. Investment in technology is increasing

Six out of every ten companies intend to invest in digital technology to enhance their supply chain procedures, synthesize data more effectively, and strengthen their analytical capabilities.

7. Emissions under Scope 3 scrutinized

53% of businesses want to increase their emphasis on sustainable sourcing.  

Scope 3 encompasses indirect emissions from an organization’s upstream and downstream operations.

• Absence of Transparency

The supply chain is a complex and diverse network comprising various stakeholders, making it difficult to follow the movement of commodities and discover bottlenecks or inefficiencies in the supply chain. This lack of transparency can result in additional expenditures, delays, and lost income.

Blockchain technology can address this issue by offering a decentralized, secure, and unchangeable ledger that can be used to track the movement of commodities and maintain transparency and traceability across the supply chain.

Blockchain, by offering real-time visibility into supply chain activities, may assist firms in identifying areas for improvement and optimizing their supply chain operations for better efficiency and lower costs.

• High Expenses

Supply chain operations may be costly, especially regarding transportation and inventory management. Cost reduction without sacrificing quality or efficiency is a significant challenge for many businesses. Blockchain technology can help businesses save money by streamlining supply chain procedures and removing the need for mediators.

For example, by establishing a decentralized marketplace, blockchain might enable buyers and sellers to deal directly, eliminating the need for intermediaries and minimizing transaction costs.

Furthermore, using smart contracts in blockchain-based supply chain systems can assist in automating numerous supply chain procedures, decreasing delays and inefficiencies, and boosting overall supply chain performance.

• Inconsistency

Inefficient supply chain processes can result in delays, waste, and lost income. Streamlining supply chain processes is thus a primary focus for many businesses.  

Blockchain technology may assist firms in optimizing their supply chain operations by offering real-time visibility into supply chain activities, allowing organizations to spot inefficiencies and areas for development.  

Organizations may minimize the time and resources necessary to manage supply chain operations by automating supply chain activities using smart contracts, minimizing delays, and enhancing overall supply chain performance.

• Fraudulent Activities

Counterfeit items represent a substantial danger to several businesses, notably the pharmaceutical, luxury goods, and technology sectors. Counterfeiting costs businesses money and endangers public health and safety. Blockchain technology can assist in addressing this issue by boosting transparency and traceability in supply chain activities.  

Blockchain, by generating a secure and immutable record of every transaction in the supply chain, can assist companies in identifying and eliminating counterfeit items from the supply chain, ensuring that customers get only legitimate and safe products.

• Traceability

Because of its integrated and all-encompassing linking of operations, blockchain makes mapping and visualizing supply chain stages simple. This improves the traceability of each component of a supply chain, such as keeping track of supplier information, procurement, and delivery of items.

• Accountability

Another advantage of blockchain is that it fosters trust among the stakeholders involved in a supply chain by allowing open access to crucial data points captured. Its traceability also increases transparency.

• Speed

Smart contracts, or portions of code, are encapsulated within a single block of a blockchain. When the requirements of the actions are satisfied, smart contracts automatically update the activities. This functionality allows for the replacement of time-consuming manual methods.

• Immutability

Since blockchain is a distributed ledger with several copies, tampering with a given transaction is nearly impossible because one must change all the copies simultaneously. As a result, blockchain adoption in the supply chain is very trustworthy and resistant to fraud.

• Concurrency

For transactions to properly follow one another within a supply chain, all parties must agree on the activities. It is impossible to work without consensus. Blockchain is also helpful in achieving and maintaining consensus over the process because all stakeholders know the transactions are automated and legitimate.

1. Walmart

Walmart is using IBM’s blockchain platform to track pork supplies in China and produce in the U.S. The goal is to improve food safety and traceability.

2. Maersk

The shipping giant Maersk uses blockchain to track real-time cargo and shipments. This helps improve supply chain efficiency and reduce fraud and errors.

3. Nestle

Nestle is partnering with blockchain firms to track the supply chain of milk from farmers in New Zealand to consumers. This improves food safety and traceability.

4. De Beers

The diamond producer De Beers is using blockchain to track diamonds right from the mine to the retailer. This helps verify the authenticity of diamonds and prevents blood diamonds from entering the supply chain.

5. Unilever

Unilever is partnering with blockchain firms to trace the supply chain of tea in Malawi and palm oil in Indonesia. The goal is to improve transparency, traceability, and sustainability across the supply chain.

6. Carrefour

The French retailer Carrefour uses blockchain to track chicken, milk, and ham to promote food trust and safety. Customers can scan product codes to see the origin and supply chain details.

7. Pfizer

Pfizer is partnering with blockchain firms to fight counterfeit drugs in the pharmaceutical supply chain. Blockchain is used to track and verify the origin of drugs and improve transparency.

Related

HOW BLOCKCHAIN DEVELOPMENT SERVICES CAN BENEFIT YOUR BUSINESS

Integration with existing systems

Integrating blockchain technology with current supply chain systems can be difficult and may necessitate extensive IT infrastructure and training expenditures.

Expansion

Blockchain networks may get more sluggish and inefficient as the number of transactions increases. This may limit the scalability of blockchain-based supply chain solutions.

Cost

While blockchain technology might help cut costs in the long term, the initial expenditure necessary to develop a blockchain-based supply chain system can be substantial.

Regulatory Compliance

Many businesses have stringent regulatory requirements, and integrating blockchain-based supply chain systems may necessitate substantial work to assure compliance.

Privacy Issues

While blockchain offers a temper-proof and secure ledger, it also produces a permanent record of all transactions. This can cause privacy problems, especially in areas where secrecy is crucial.