Blockchain Paves the Way for Transparent Supply Chain Management

Swamini Kulkarni, Content Writer Managing today’s supply chain is a herculean task. As per the product, the supply chain can extend over hundreds of stages according to geography, invoices, and payments and it involves innumerable individuals and entities over months of period. However, the most popular technology of this age, blockchain is here to deal with the complexity and lack of transparency of current supply chains in the supply chain & logistics industry.

With the use of blockchain, every transaction on the network is recorded and made available for all entities involved to verify it. Moreover, it eliminates the need to transfer information between organizations over mail as it centralizes the information sharing within enterprises and assures transparency at all levels of the supply chain. According to Allied Market Research, the global blockchain supply chain market is estimated to reach 9.85 billion by 2025, registering a colossal CAGR of 80.2% during the period 2018–2025. Increasing awareness regarding the benefits of blockchain and rapid technological innovations are estimated to propel the growth of the market.

Need for blockchain in supply chain

Experts believe that the current supply chain is broken. Over the past hundred years, the supply chain was quite simple as the commerce was mostly local, however, the globalization has made it a bit complex. In the history of the supply chain, there have been several innovations including the advent of haul freight via trucks and incorporation of personal computers, which has revolutionized the supply chain management.

However, with globalization, it has become immensely difficult for customers to know the value of a product due to the lack of transparency. Moreover, it is problematic to find out the required supply chains if there are any unauthentic and unethical practices. This makes the supply chain inefficient as vendors and buys spend their time connecting dots to truly know the value of the product.
Blockchain to the rescue

While the introduction of blockchain was for Bitcoin and all other cryptocurrencies, it has secured its places into several other industries. It can be used for the exchange of goods, tracking, and payment of transactions, and to oversee agreement and contracts. As blockchain technology records every transaction on a block and multiple copies are distributed over several nodes, it makes supply chain management highly transparent. Blockchain gained its traction due to its ability to offer security, which makes it irreplaceable in the supply chain. Thus, it increases efficiency and transparency of supply chains and in turn, gives a positive response on warehousing to delivery and payment. As chain of command is the fundamental requirement in supply chain management, blockchain makes it the most suitable candidate.

Major companies incorporate blockchain in supply chain management

Despite the benefits presented by blockchain, the widespread adoption of the technology is still in the distance. Recently IBM launched blockchain in the supply chain, TradeLens, to add more visibility and efficiency across the supply chain. According to the company, if blockchain completely replaces the existing process, it can increase global GDP by 5% and boost the trade volume by 15%. Moreover, blockchain can optimize business transactions and trading relationships with robustly secure, global business networks. With the help of TradeLens, the company expects to benefit from the shared ledger that is updated and validated with every network participant, enhanced asset utilization, and streamlined inventory management.

New platforms such as TradeLens are expected to launch in the future as more companies are realizing its potential and are ready to bet on the emerging technology. What’s more, the food & beverage industry would adopt the blockchain into its supply chain. As goods such as grain, turkeys, and parcels change hands several times before it reaches its end user, thus it is vital to know detailed information regarding its origin and travel data. For instance, to find the source of the last E.Coli outbreak took months, which forced Walmart to incorporate blockchain-based traceability program for lettuce.
The world’s biggest mining firm, BHP Billiton, announced that it would use blockchain to effectively track and record data regarding its mining processes with its vendors. Moreover, it has increased the efficiency and allowed the company to better communicate with its partners. Apart from this, for vendors, it was the easiest way to know if the company they invest in share the same views in sustainable manufacturing.

De Beers, the greatest diamond mining and exploration company, also incorporated blockchain to keep track of stones from its mining site to till they reach to consumers. This way, it can avoid issues such as “blood diamonds” and assure customers that they are buying genuine stone.
The complete transparency and no scope for frauds are the most exciting benefits for the market players. Thus, with the increasing awareness regarding the technology, the blockchain supply chain market is bound to witness limitless opportunities.