Blockchain is arguably one of the most significant and most beneficial modern technologies to be introduced to the supply chain. For one reason alone, it has the power to transform the industry and all related operations single-handedly. That reason is increased visibility and transparency, which means precise controls or oversight is now more possible than ever.
Of course, additional benefits exist, too, like the reduction of inconsistencies, a boon to quality assurance, improvements in payment processing and wide-scale compliance solutions.
How is this possible? How could one form of technology hope to solve and alleviate so many problems?
What Is Blockchain?
First, let’s consider what blockchain technology is. This will help explain some of the benefits and solutions it can provide in the supply chain.
Initially, blockchain was a platform designed to facilitate the transfer and exchange of Bitcoin, a type of cryptocurrency. Similar to a peer-to-peer style network, blockchain exists in the cloud across a variety of machines or servers.
In this way, it is distributed and decentralized, which means no single group, entity or individual has the control or power to alter operations or data. In fact, it would be nearly impossible to change information that exists in the chain, because you’d have to edit every single version of it across thousands ” maybe even millions ” of computers and servers.
A block of data ” usually a transaction in crypto ” enters the system once it is verified. These chunks or “blocks” are connected to all that existed prior forming a sort of chain, hence the name blockchain. This is also what contributes to a verifiable and accurate system, because each block is connected to the one prior, and this data cannot be altered or removed.
With a particular Bitcoin, for example, it’s possible to trace its history all the way back to the point of origin. You can see how many times it changed hands, nearly all parties involved, and also all the transactions it was involved in.
Blockchain’s Impact on Supply Chain Visibility
In the supply chain, blockchain and similar platforms can monitor various goods, how they exchange hands and what this means for the market. This helps alleviate complexity, but it affords a more direct series of controls, too.
Say food is being compromised along with a transport route. They travel from the source, passing through various transports, channels and parties, including suppliers, vendors, distributors and even retailers. Any one of those parties could be the culprit of any contamination. Or, it could be a particular system or handling process along the journey. For example, maybe a cold storage system was not maintained properly.
But if modern IoT and distributed via blockchain track those same goods, they can also measure them in full. It’s suddenly possible to pinpoint exactly what and where the problem is happening and take action. This isn’t out of the realm of possibility, either. Advanced robotics and IoT-enabled automation tools are already prominent throughout the supply chain. It’s just a matter of incorporating the proper blockchain systems.
The traceability extends even further to the point where goods land on store shelves or in a customer’s hands. A company could effectively track, identify and pull all contaminated supplies far beyond the point where conventional measures would reach.
Blockchain and Quality Assurance
Because each block or data chunk is verifiable and traceable ” visibility also plays a role here ” you can see precisely where content or supplies are coming from. This provides increased controls over quantity, quality and sourcing.
The benefits of such a thing become even more apparent when dealing with goods sourced from a large number of suppliers. A retailer, for example, might be receiving meat shipments from several local suppliers. If blockchain technology tracked and distributed those goods, the retailer would instantly be able to compare experiences and results, allowing for an accurate choice between the suppliers.
This holds true even in cases where one party may not have direct experience with another. They can see a verifiable history, right there in the blockchain that provides a certain level of assurance.
Blockchain and Payment Processing
The payment processing industry, as a whole, is currently being transformed by the deployment of blockchain technology.
Alongside a wide range of payment options, payments processed via the blockchain are instant, verifiable and always come from a secure place. A transaction in the blockchain only happens between two safe, authorized parties. Also, once transferred, the funds are immediately available for use ” similar to digital funds exchanged through online banks or services.
Frankly, this also allows supply chain parties to interact and work with one another in new, innovative ways.
Blockchain and Industry Compliance
The high level of traceability affords an excellent measure of insight regarding compliance. One of the major concerns when dealing with the supply of products or goods is where they are coming from. As a business, you agree to trust the parties before you, assuming they did their due diligence. But what of industries like precious stones or consumer electronics where the goods could easily be stolen, or at the least required by unethical means?
The blockchain allows for accurate visibility all the way down the line, so companies can be sure they are sourcing goods from the appropriate parties. Furthermore, you can see just how many times something has exchanged hands and who has been involved. In an industry like pharmaceuticals that can be the difference between acquiring valid, trustworthy drugs and a counterfeit supply.
On a fundamental level, this also allows parties to hold each other more accountable for industry compliance and regulatory measures. If someone along the chain is not doing what they’re supposed to, it will immediately be apparent ” and you can quickly verify what went wrong.
The blockchain is, hands down, the ultimate form of accountability and transparency, and that’s a good thing as far as supply chain involvement goes.
