Fostering Supply Chain Business Growth With Blockchain in 2019
Have you ever thought about the product life cycle? Whether that’s a cheese production or car manufacturing — they all go through a series of established processes not transparent to end-users. Therefore, we cannot fully fathom if cheese or car we purchased can be traced back to the claimed source. Currently, there are no automated provenance and traceability solutions to prove material’s origin, a trail of transportation of materials, conversion of materials into fully-fledged products, packaging, distribution, and shipping.
Blockchain-powered Supply Chain
Blockchain characteristics of data integrity, security and transparency are immensely valuable for the supply chain. Modern-day supply chains are now incredibly intricate, comprised of dozens of elements; production, procurement, logistics, sales, customers — to name a few — and with so many elements, tracking a product’s trail from start to finish can prove tricky.
In cases such as product recalls or quality mismatches, bolstering traceability could pinpoint the challenges in the organization and reduce the cost of locating the root of the challenge in the first place. Currently, Walmart is implementing blockchain to isolate the cause for future food poisoning and swiftly recall poisoned products, whereas Nestle is tracing provenance of food ingredients in a number of its products.
This demonstrates, in short, why the supply chain is considered as blockchain’s most promising use case.
What is one way that blockchain technology can improve distribution of goods?
In most supply chains, participating or trading parties are pre-defined and known to each other. Parties usually refrain from being open-sourced and data-transparent as proprietary details such as demand, capacity, orders, pricing, margins, and other internal aspects are business-sensitive and kept away from the unknown participants. As a consequence, the majority of supply chains blockchain solutions are therefore permissioned or private, with centrally governed access management of trading parties.
Theoretically, blockchain solutions can be built both on public and private networks. In practice, it is highly unlikely that we will see public verifications of proposed blocks within the supply chain as all parties are known. If we take a look at one of the biggest blockchain supply chain use cases — Shipping, it is clear that the chain is consists of parties, including haulers, ports, customs, and shipping lines, all responsible for validating each block. In cases of a small number of trusted parties, the necessity to independently validate consensus protocols used in the public domain is limited. Ultimately, a supply chain ends with customers’ full insight from providence to retail.
How is blockchain best used as a competitive advantage for a business?
- Enables safer and more effective supply chains by leveraging innovative technologies
- Helps trace and recall dangerous and brand-damaging products
- Improves brand integrity protection
- Helps fight product counterfeiting
- Keeps customers informed on products origin, quality and safety
- Supports standards and certification requirements
- Supports food sustainability efforts
