Firms have begun experimenting with blockchain tech for applications in the entertainment sector (Monegraph is utilizing blockchain tech), supply chain, gaming, the educational industry, and even agriculture.
Stakeholders in the supply chain industry are turning to blockchain to resolve the many challenges they are plagued with and save operational costs for companies. These companies have run on legacy ERP systems and supply chain management systems for so long that one wonders why they would consider switching to blockchain technology. Blockchain will not necessarily phase out their existing systems, yet, it will solve a host of problems for the supply chain industry.
A blockchain is a distributed and immutable ledger of information, structured in a decentralized manner that ensures every node in the network stores a copy of every transaction or information. Through blockchain technology, transactions can be carried out between two anonymous parties in confidence.
Both parties know that the records of their transactions are open to everyone on the network and cannot be manipulated because of the decentralization. Information on the blockchain is stored in blocks, and each node within the network receives an updated copy of these blocks every time a new transaction occurs.
Challenges in the Supply Chain Industry
The supply chain market is worth trillions of dollars, and there are many big players like Walmart, Procter Gamble, MasterCard, IBM, and Hayward. The complexities of a typical supply chain transaction are numerous, and many issues could arise that are problematic and costly to resolve.
The nature of supply chain transactions is complex, passing through multiple checks from manufacturing to procurement, shipping, wholesale, retail, down to the final consumer. As expected, these transactions are less likely to be transparent, with several inconsistencies in information certain to occur. At specific points in the transaction, some stakeholders, like banks, could be left in the dark about the progress of the entire endeavor. Having to rely on manual effort to obtain that information could prove expensive and prone to errors.
Counterfeit Products and Grey Markets
Corrupt players specialize in producing and marketing identical products of lesser quality and pass them off as genuine. Of course, this affects the brand image of companies, as well as customer trust.
Product Tracking and Recall
Following the journey of products from the manufacturer to the final consumer could prove expensive and impossible even for the big brands in supply chain management. When defective products need recall, how can the manufacturer correctly locate the faulty batch and track its movement to the likely stores that purchased the defective products? A lack of visibility into the distribution of products could put people at risk, significantly when these products can negatively affect people’s health.
Raw materials used for production are essential, and the sourcing of these products, especially in the agri-based industry, is fundamental to quality assurance. Farmers should be able to access data that reveals where their produce goes, while manufacturers should have access to information on the sources of their raw materials. Sadly, supply chain companies cannot sufficiently act as a reliable source of information for these stakeholders.
Blockchain to the Rescue
Blockchain technology is helping supply chain companies solve their numerous problems, provide more transparency and transactional information, and equally save costs of operation. Check out how big players in the supply chain industry are utilizing blockchain tech to streamline processes.
The Farm-to-fork Movement
Eateries and restaurants have embarked on this, it uses blockchain to track the distribution of food products from the farms till their final form. Starbucks ‘farm to cup’ will use a blockchain to track beans, giving access to both consumers and farmers for transparency purposes. Walmart uses a blockchain system to track its food products for traceability and streamlined recalling of defective products.
By adding RFID tags to products and tokenizing them on the blockchain, supply chain companies easily monitor the distribution and never suffer a blind spot. The information would always be stored on the blockchain by all parties involved.
Blockchain application transcends cryptocurrencies and financial services. Big names in the supply chain industry now leverage blockchain to meet the rising demands of the global economy.