From Factory to Doorstep: How Blockchain is Changing the Supply Chain Game in 2023
In today’s global economy, managing a supply chain can be a challenging task. From sourcing raw materials to delivering finished products, there are numerous touchpoints where data can be lost or altered, leading to inefficiencies, delays, and increased costs.
To tackle these issues, many organizations are turning to blockchain technology. Blockchain provides a secure and transparent way to record, track, and verify transactions and data across the supply chain, ensuring that every participant has access to accurate and real-time information.
In this blog, we will explore the practical aspects of implementing blockchain in supply chain management, such as choosing the right platform, developing a proof of concept, and integrating existing data. We will look at some real-world examples of companies that have successfully implemented blockchain in their supply chains and the benefits they have gained.
By the end of this blog, you will have a better understanding of how blockchain technology can transform the supply chain and drive greater transparency, accountability, and trust across the entire ecosystem. So, let’s dive in and explore the world of blockchain in supply chain management.
05 Great Reasons to Use Blockchain Technology in Supply Chain Management
Supply chain management has been plagued by several key problems, including security concerns, lack of transparency, difficulties in traceability, inefficiencies, and the need for automation. Fortunately, blockchain technology provides solutions to each of these issues.
Security
Blockchain technology enhances security by creating an immutable and encrypted record of transactions that cannot be altered or tampered with.
By storing data across a network of computers, rather than a single server, blockchain makes it difficult for hackers to view or steal data.
Additionally, personal data can be anonymized and permissions used to prevent unauthorized access.
Imagine you run a large online store, and you want to ensure that customer data is kept secure. By using blockchain technology, you can create a record of all transactions that are encrypted and cannot be altered.
This means that even if a hacker gains access to your system, they will not be able to view or steal customer data. You can use permissions to control who has access to the data, further protecting it from unauthorized use.
Transparency
Traditional supply chain management requires each organization to maintain a separate database, leading to a lack of transparency.
With blockchain, transactions, and data are recorded identically in multiple locations, ensuring full transparency for all network participants with permission access.
Transactions are time- and date-stamped, providing a clear record of the entire history of a transaction.
Now imagine you are a manufacturer of a popular product, and you want to ensure that your customers know exactly where their products are coming from.
By using blockchain technology, you can create a transparent record of all transactions and data related to your product.
This means that customers can see exactly where the product was sourced from and how it was produced, giving them confidence in the quality of the product.
Traceability
Blockchain creates a record of an asset’s source and history at every step of its journey, establishing an audit trail.
This enables consumers to have proof of environmental or human rights issues surrounding a product and exposes weaknesses in any supply chain where goods might sit on a loading dock awaiting transit.
Blockchain also allows for the direct sharing of provenance data with customers.
Continuing with the same example, let’s say you want to ensure that your customers know that your product was ethically sourced and produced.
By using blockchain technology, you can create a record of every step in the production process, from the raw materials used to the final product.
This means that customers can trace the entire journey of the product, giving them confidence in its ethical standards.
Efficiency and Speed
Supply chain management can be inefficient and time-consuming, often requiring third-party mediation and paper-heavy processes.
Blockchain streamlines these processes, allowing for faster and more efficient transactions.
Documentation can be stored on the blockchain along with transaction details, eliminating the need for paper exchanges and reconciliation of multiple ledgers. This leads to faster clearing and settlement times.
Now let’s say you are a logistics company, and you want to ensure that your supply chain is as efficient as possible.
By using blockchain technology, you can create a streamlined system for recording and tracking transactions.
This means that you can eliminate the need for paper exchanges and multiple ledgers, reducing the time it takes to process transactions and increasing the efficiency of your supply chain.
Automation
Blockchain technology enables the automation of transactions through the use of smart contracts. The subsequent stage in the transaction or process is automatically started once pre-specified requirements are satisfied.
This reduces human intervention and reliance on third parties to verify contract terms. For example, in insurance, claims can be settled and paid automatically once all necessary documentation is provided by the customer.
Let’s say you are an insurance company, and you want to ensure that claims are settled quickly and efficiently. By using blockchain technology, you can create a system for automating claims processing.
This means that once all necessary documentation is provided by the customer, the claim can be settled and paid automatically, reducing the need for human intervention and speeding up the claims process.
Seven Key Areas to Use Blockchain Technology in Your Supply Chain
Supply Chain Management refers to the management of the flow of goods and services from the point of origin to the point of consumption. Blockchain technology can facilitate the management of supply chains by providing transparency, traceability, speed, and consensus.
Purchasing
Purchasing is a crucial part of supply chain management as it involves the acquisition of raw materials, equipment, and services required for manufacturing.
The use of blockchain technology in purchasing helps to streamline the procurement process and eliminate the need for intermediaries.
Blockchain technology can be used to create a decentralized platform where suppliers and buyers can directly transact with each other, reducing transaction costs and increasing efficiency.
One example of the use of blockchain technology in purchasing is VeChain, a blockchain-based supply chain management platform that allows for real-time tracking of products and services.
VeChain enables suppliers and buyers to conduct secure transactions without the need for intermediaries, resulting in faster transactions and reduced costs.
Walmart, the largest retailer in the world, has implemented blockchain technology in its supply chain to track the origin of food products. The company uses blockchain to track the source of each ingredient in a food product, enabling it to identify the source of any contamination quickly.
Manufacturing
Manufacturing is the process of transforming raw materials into finished goods. Blockchain technology can be used to optimize the manufacturing process by providing a secure and transparent record-keeping system.
Blockchain technology can also help to ensure the authenticity and quality of products, which is essential in industries such as pharmaceuticals and luxury goods.
One example of the use of blockchain technology in manufacturing is Provenance, a blockchain-based platform that tracks the origin and authenticity of products.
Provenance allows manufacturers to track the entire manufacturing process, from sourcing raw materials to the delivery of finished goods.
This enables manufacturers to ensure the quality and authenticity of their products, thereby reducing the risk of fraud and counterfeiting.
Intel, a leading technology company, has developed a blockchain-based platform called SaaS (Supply Chain Assurance Service) to track the origin and authenticity of electronic components used in its products.
This enables the company to ensure the quality and authenticity of its products, thereby reducing the risk of counterfeit products.
Inventory Management
Inventory management is the process of managing and controlling the flow of goods and materials within a supply chain. Blockchain technology can be used to create a transparent and secure inventory management system, which allows for real-time tracking of goods and materials.
One example of the use of blockchain technology in inventory management is Ambrosus, a blockchain-based platform that enables the tracking of food products from farm to table.
Ambrosus allows for real-time monitoring of the entire supply chain, from the origin of the food product to its delivery to the consumer.
This enables food manufacturers and retailers to ensure the quality and safety of their products, thereby increasing consumer trust.
Maersk, the world’s largest container shipping company, has implemented blockchain technology in its supply chain to track the movement of goods and materials during transit.
The company uses blockchain to create a transparent and secure system for tracking shipments, enabling it to ensure the timely and secure delivery of goods.
Demand Planning
Demand planning is the process of forecasting and planning for the demand for goods and services. Blockchain technology can be used to create a decentralized platform for demand planning, which allows for real-time data sharing and collaboration between suppliers and buyers.
One example of the use of blockchain technology in demand planning is Waltonchain, a blockchain-based platform that enables real-time tracking of products and services.
The Waltonchain platform allows for the creation of a decentralized marketplace where suppliers and buyers can collaborate and share data, resulting in more accurate demand forecasting and better planning.
Unilever, a leading consumer goods company, has implemented blockchain technology in its supply chain to improve demand forecasting.
The company uses blockchain to create a decentralized platform for collaboration between suppliers and retailers, enabling more accurate demand forecasting and better planning.
Warehousing
Warehousing is the process of storing and managing goods and materials within a supply chain. Blockchain technology can be used to create a secure and transparent warehousing system, which allows for real-time tracking of goods and materials.
One example of the use of blockchain technology in warehousing is BlockArray, a blockchain-based platform that enables real-time tracking of products and materials.
BlockArray allows for the creation of a decentralized platform where suppliers and buyers can track the movement of goods and materials within the warehouse, resulting in increased efficiency and reduced costs.
DHL, a global logistics company, has developed a blockchain-based platform called DHL Supply Chain Visibility and Risk Management, which enables real-time tracking of goods and materials within the warehouse.
The platform provides a transparent record of the movement of goods and materials, enabling stakeholders to monitor and manage inventory more efficiently.
Transportation
Transportation is the process of moving goods and materials within a supply chain. Blockchain technology can be used to create a secure and transparent transportation system, which allows for real-time tracking of goods and materials during transit.
This can help to reduce the risk of loss, theft, or damage to goods during transportation.
One example of the use of blockchain technology in transportation is ShipChain, a blockchain-based platform that enables real-time tracking of shipments.
ShipChain allows for the creation of a decentralized platform where shippers, carriers, and receivers can track the movement of goods and materials during transit.
This enables stakeholders to ensure the timely and secure delivery of goods, thereby reducing the risk of losses or delays.
Maersk: A global shipping company that uses blockchain technology to manage its supply chain, enabling greater transparency and security in the transportation of goods.
Customer Service
Customer service is an essential aspect of supply chain management, as it involves providing support and assistance to customers throughout the supply chain.
Blockchain technology can be used to improve customer service by providing a secure and transparent record-keeping system that enables stakeholders to track and resolve customer issues quickly.
One example of the use of blockchain technology in customer service is the Warranteer platform, a blockchain-based platform that enables customers to track and manage their product warranties.
The Warranteer platform provides a transparent record of product warranties, enabling customers to track and manage their warranty claims more easily. This can help to improve customer satisfaction and loyalty.
Walmart: The retail giant is using blockchain technology to improve the traceability and transparency of its supply chain, allowing for more efficient tracking of products and quicker resolution of customer issues.
How to Implement Blockchain Technology Into Your Supply Chain Management?
Implementing blockchain in the supply chain requires careful planning and execution. Here are 7 steps to follow when implementing blockchain in the supply chain:
Step 1: Identify the Problem(s) You Want to Solve
Before implementing blockchain, it’s essential to identify the specific challenges you want to address in your supply chain. These may include issues related to tracking, transparency, and security.
Once you have a clear understanding of the problems you want to solve, you can begin to explore how blockchain technology can help.
Step 2: Define the Scope of Your Blockchain Solution
It’s important to define the scope of your blockchain solution before you start developing it.
Determine which parts of your supply chain you want to integrate with the blockchain and which stakeholders will be involved. This will help you design a solution that is tailored to your needs.
Step 3: Choose the Right Blockchain Platform
There are many blockchain platforms to choose from, each with its own strengths and weaknesses.
Consider factors such as scalability, security, and interoperability when choosing a platform. You should also think about whether you want to use a public or private blockchain.
Step 4: Develop a Proof of Concept
Before fully implementing blockchain in your supply chain, it’s a good idea to develop a proof of concept.
This will help you test the feasibility of your solution and identify any potential issues. You can use a small-scale pilot project to test your proof of concept.
Step 5: Plan for Data Integration
Integrating your existing data into the blockchain can be a complex process. You’ll need to determine which data is relevant to your solution and how it should be structured. You should also consider how to maintain data integrity and security.
Step 6: Implement your Blockchain Solution
Once you have a clear plan and proof of concept, it’s time to implement your blockchain solution.
This will involve developing smart contracts, setting up nodes, and establishing communication channels between stakeholders. Make sure you have a clear plan for deployment and testing.
Step 7: Monitor and Evaluate your Solution
After implementing your blockchain solution, it’s important to monitor its performance and evaluate its impact.
This will help you identify any issues and make improvements. You should also be prepared to adapt your solution as needed to meet changing business needs.
Case Studies for Blockchain Technology in Supply Chain Management
Walmart
Walmart uses blockchain technology to secure the health of its food supply chain by tracking the temperature of food during transportation.
With a large supply chain, it can be challenging to keep track of food conditions, but blockchain technology allows for the record of food provenance in real time, preventing contamination and reducing waste due to spoilage.
Intel in Fruit Distribution
Intel partnered with a blueberry distributor to create a system that tracks the environmental conditions of the product from harvesting to storage and delivery.
The system uses Intel’s Connected Logistics Platform and Hyperledger Sawtooth Blockchain to control factors such as temperature, humidity, and light in real time. This enables the minimization of freshness loss and ensures that customers receive fresh fruits.
AgriDigital
AgriDigital is a platform that digitizes the agricultural sector by creating a blockchain-based verification system for farming procedures and goods. By implementing blockchain technology, customers can trace the organic status of their products along the supply chain.
This allows for more transparency and accountability in the agriculture industry, as customers can have access to data about the stages of growth and transportation of their products.
Techrock
Techrock is a firm that uses smart packaging and a Hyperledger-based blockchain to verify the authenticity of infant formula.
The unique verification tag on the product package can be confirmed through a smartphone app, providing peace of mind for parents who want to ensure that their product is not counterfeit or contaminated with melamine poison.
TraSeable Solutions has formed a partnership with the World Wildlife Fund (WWF)
TraSeable partnered with WWF to prevent illegal fishing and ensure compliance with ESG standards.
The system gathers data about the harvests, including location, catch logs, and crew details, to minimize the sale of illegal or unethical fishing.
QR codes on fish packages enable end consumers to track this information encoded via blockchain, providing transparency in the fishing industry.
The Cost of Implementing Blockchain in Supply Chain Management:
When considering implementing blockchain technology in your supply chain, it’s essential to keep in mind the factors that can affect the project’s cost and duration.
Based on our experience with blockchain implementation in supply chain management, we have identified several key factors to consider.
- Implementation Approach
Businesses must decide whether to build a blockchain solution from scratch or use an existing blockchain protocol that may require customization to fit their specific needs.
Building a blockchain from scratch is time-consuming and expensive but offers complete control and customization over the blockchain.
Using an existing blockchain protocol is less expensive but may require customization to fit the specific needs of the supply chain.
2. Type of Blockchain Network
The type of blockchain network that a business chooses will depend on the security and privacy requirements of its supply chain transactions.
Private blockchains offer the highest level of security and privacy, as they are only accessible by authorized parties.
Consortium blockchains are accessible by a group of authorized parties, while hybrid blockchains offer a combination of both private and consortium blockchains.
The type of blockchain network will affect the cost of integrating it into the supply chain. Private blockchains are the most expensive to implement due to their high level of security and privacy.
Consortium blockchains are less expensive but still offer a high level of security, while hybrid blockchains are the least expensive to implement as they offer a lower level of security and privacy.
3. Consensus Mechanism
The consensus mechanism chosen affects the cost of transactions and the security of the supply chain network. Proof of Work (PoW) is the most secure but also the most expensive and slowest consensus mechanism.
Proof of Stake (PoS) is less expensive but also less secure. Other consensus mechanisms, such as Delegated Proof of Stake (DPoS) and Practical Byzantine Fault Tolerance (PBFT), offer a balance of security and cost-effectiveness.
4. Number and Complexity of Functional Modules, Web, and Mobile Applications, and Integrations With Other Software Systems
This factor will affect the cost of integrating blockchain technology into the supply chain.
The more complex the system, the more expensive it will be to integrate blockchain technology.
5. Performance, Scalability, Cross-Chain Interoperability, and Security Requirements of the Blockchain Solution
The more performance, scalability, cross-chain interoperability, and security requirements that need to be met, the more expensive it will be to implement blockchain technology.
6. Decide on the Deliverable
Businesses must decide whether to develop a proof of concept, a minimum viable product, or a full-scale solution.
A proof of concept is the least expensive to develop, but it only provides a basic understanding of the technology.
A minimum viable product offers a more comprehensive understanding of the technology, but it is more expensive to develop.
A full-scale solution is the most expensive to develop but offers the most comprehensive understanding of the technology and its potential impact on the supply chain.
By carefully evaluating these factors, you can develop a cost-effective and efficient blockchain solution that fits your supply chain’s specific needs.
At Last, Data Can’t Be Lost.
Imagine a world where you can trace your product’s journey from the factory to your doorstep, with complete transparency and security. That’s the power of blockchain technology in supply chain management.
Blockchain provides a digital ledger that can’t be tampered with, ensuring complete transparency and security throughout the supply chain. By implementing blockchain technology, businesses can track their products in real time and reduce inefficiencies, waste, and fraud.
Not only does blockchain increase transparency and security, but it also improves supply chain efficiency. By eliminating intermediaries and manual processes, blockchain reduces transaction times and costs, making supply chain transactions faster and more cost-effective.
In a nutshell, blockchain technology can revolutionize the way we manage supply chains, providing transparency, security, and efficiency. It’s time for businesses to embrace this powerful technology and transform the way they do business.
