Today’s supply chain management – all the links to create and distribute goods – extremely complex. Depending on the product, the supply chain can go through hundreds of stages, many geographical (international) locations, multiple invoices, and payments, there are many individuals and organizations involved and lasts for many months. Due to the complexity and lack of transparency of our existing supply chains, there is an interest in how blockchains can transform supply chains and logistics. Take a look at what’s broken, how the unique attributes of blockchain can help and consider a few examples of blockchain that have affected the supply chain.
How is the supply chain broken?
Our current supply chain is broken in many ways. Over a hundred years ago, the supply chain was relatively simple because commerce was local, but they became extremely complex. Throughout the history of the supply chain, there have been innovations such as converting to transporting goods over trucks rather than railroads or the emergence of personal computers in the 1980s resulting in significant changes in governance. Supply chain management. Since manufacturing has been globalized, and a large portion of it is made in China, our supply chain is heavy with their own complexity.
It is difficult for customers or buyers to truly know the value of a product because of the lack of significant transparency in our current system. Similarly, it is difficult to investigate supply chains when there is a suspicion of illegal or unethical practices. They may also be inefficient when providers and vendors try to connect the dots on who needs what, when and how.
What is blockchain and how can it help supply chain?
While the most commonly used blockchain is in cryptocurrency, Bitcoin, the fact that blockchain – basically a scaled-down digital ledger – has many applications and can be used for any exchange, Direct/contract, track and, of course, payment. Since each transaction is recorded on a block and on multiple copies of accounting books distributed on multiple nodes (computers), it is very transparent. It is also very safe because each block is associated with a block before and after it. There is no central agency on the blockchain, and it is extremely effective and scalable. Finally, blockchain can increase the efficiency and transparency of the supply chain and positively impact everything from warehousing to delivery to billing. Command strings are necessary for many things, and blockchains have built-in command strings.
The very essentials for reliability and integrity in a supply chain are provided by the blockchain. Blockchain provides consensus – there is no dispute in the chain related to the transaction because all entities in the chain have the same accounting version. Anyone in the blockchain can see the ownership chain for the blockchain property. Logs on blockchain cannot be deleted but are important for a transparent supply chain.
An example of blockchain used in today’s supply chain
Since blockchains allow money transfers anywhere in the world without using a traditional bank, it is very convenient for a globalized supply chain. That’s how the Australian car manufacturer Tomcar paid for its suppliers – through Bitcoin.
In the food industry, it is imperative to have a solid record to track each product to its source. So, Walmart uses blockchain to track its pork sources from China and the blockchain logs where each piece of meat comes from, processed, stored and sold by date. Unilever, Nestle, Tyson, and Dole also use blockchain for similar purposes.
De Beers giant diamonds use blockchain technology to track rocks from the moment they are taken to the point when they are sold to consumers. This ensures the company avoids “conflict” or “blood diamonds” and assures consumers that they are buying genuine articles.