There is more to blockchain technology than cryptocurrencies. Digital ledgers are highly functional recordkeepers. Supply chains have needed an innovation in recordkeeping for some time.
Current Challenges Facing Supply Chains
The technological revolution outpaced supply chains. Once products could not move fast enough. Now, innovations in transportation, storage, and production have grown exponentially in terms of global goods distribution. Computers of the 1980’s led this change. While advances in recordkeeping have occurred, accounting for true value remains significant. Without knowing a product’s true value, supply chains remain inefficient. Some of the contributing factors of divergent valuation are overcomplexity, lack of transparency, investigative doldrums, and bad players.
Benefits of Blockchain Technology
Some expected use cases of employing blockchain technology are:
- digital paper
- quality certification
- contract performance
- settlement automation
Blockchains can solve many of the underlying problems of discretely valued supply chains. They have the potential to increase efficiency, integrity, and transparency. Blockchain technology also establishes an unchangeable record. Together, with a native chain of command, blockchains offer record systems the type of transformative innovation that the Internet afforded the dissemination of information.
Maintaining the Integrity of Supply Chains on a Fundamental Level
While consumers want integrity in their products, businesses must also strive for integrity in their overall supply chain management. Blockchain technology can secure the “in between stages” and provide end-to-end tracking to improve overall business operations. Additionally, supply chain integrity benefits profitability, sustainability, risk mitigation, and efficiency.
The Product Journey
An amazing aspect of employing a blockchain is found in the history of a product. Every blockchain can easily provide a “product journey” from manufacturing and transport to warehouses and retailers. Public blockchains make this information available to everyone. While a full product journey will require that everyone involved be a participant, it illustrates how transformative the technology can be. There is no need for additional programming or applications because tracking and transparency is an essential part of the system.
Walmart recognizes the value a built-in product history. The global retail giant is working with IBM and Beijing’s Tsinghua University to track food. The supply of perishables is an obvious need area. Product histories also are transformative for supply chains where integrity is critical. For instance, the diamond industry has been plagued by bad players. A transparent and traceable blockchain-based supply chain can virtually eliminate “blood diamond” type products.
Another benefit of logging the product journey pertains to human beings. Quality checks and proper certifications can become much more trusted when the underlying system is transparent. Chipotle has recognized that its business operations exist in an ecosystem much larger than itself. It is turning to blockchain technology to gain advantages over unpredictable factors like its vendors.
Blockchains have dynamic data applications. Primary reasons for these transformative applications are its permanent history and transparency. Supply chains that employ blockchain technology gain access to end-to-end tracking. Records with this capability become more efficient, discernable, and secure. The future of supply chains is inextricably tied to innovations in the blockchain industry.