Modern-day supply chains have resulted in the creation of a globalized world of inter-connected commerce, far beyond anything that the previous generations could have imagined. Indeed the very marvels of global supply chain and logistics industry are providing impetus to growth through trade and commerce, which in itself is fuelled further by consumption and knack for market production. But with all this comes unprecedented complexity, featuring cooperation between multiple parties for transportation of goods around the globe. Supply Chain and Logistics industry faces numerous challenges of maintaining authenticity, visibility into the origin, and asset handling as they cross organizational boundaries.
Traversing multiple geographical (international) locations and spanning over hundreds of stages, contemporary supply chains extending over months depending upon product often include a multitude of invoices and payments with several individuals and entities involved. Blockchains technology with all of its use cases has the potential to transform today’s complex supply chain and logistics industry.
Blockchain can facilitate tracking the status of an asset by multiple parties at the same time, by acting as a shared data layer across a custodial chain and sharing information on asset handling and provenance, all within a secure and transparent ecosystem.
Basically a secure, shared, distributed ledger, Blockchain technology is uniquely positioned to help create trust, transparency, and accountability between many parties in supply chain scenarios.
Major Blockchain applications for Supply Chain and Logistics:
- Smart contract – Programmable digital contracts that auto-execute upon the completion or fulfilment of pre-determined certain conditions. The Smart contract scan can automate key industrial processes. Given the amount of complex paperwork in the supply chain, there is the potential for creating smart contracts in many areas for speed, trust, and security to name a few. Lastly, the chain of command is essential for many things, and blockchain comes built in with the chain of command.
- Increasing Trust and Security – Blockchain can potentially augment trust and security in supply chains during the transfer of assets (physical assets, documents, currency etc.) Everyone on the blockchain can see the chain of ownership for an asset on the blockchain. Payments via cryptocurrencies are the most appropriate real-world instance. Records storing transaction information on the blockchain cannot be erased, thus enforcing a high level of transparency. Can be hugely beneficial for speeding up payment processes such as credit checks, payment terms, while also shortening the order to cash cycle et.al.
- Developing new methods for data exchange – Blockchain could fundamentally alter the way data is exchanged within global supply chains. Take, for instance, instituting carefully executed blockchains and smart contracts in place of the stringent levels of documentation between parties during shipments. This automatically eliminates the major logistics hurdles with supply chains such as the bill of lading, customs papers, etc.
- Quality Control, CSR, Maintenance, Accountability, and Reporting are other facets of supply chain business administration that could be optimized effectively with the help of blockchain.
From administrative efficiency to dispute resolution, transparency in the business ecosystem to ownership and tracking, blockchain has demonstrative proofs-of-concept that ably correct the issues hindering the growth of supply chain and logistics industry. Blockchain-enabled platforms for facilitating coordination of documents on a shared distributed ledger, would one day make the physical paperwork an obsolete entity. Smart contracts for instantaneous approvals and efficient custom clearances, blockchain technology in supply chains would make the processing time at checkpoints almost negligible.
Provenance and Attestation
Increasing awareness regarding product origin and methods of manufacturing, including concerns about ingredients and labour, is evident in consumers these days. International standards and certifications such as non-GMO, Fair-trade, organic, conflict-free etc. are highly sought-after and could be faced with relative ease. Counterfeit products, particularly in pharmaceuticals and food, is harmful to consumers and disastrous for brands that are discovered selling them.
With blockchain technology, astute tracing of products right from the strip of land they’ve originated from till the point of delivery at retail becomes possible. Certified farmers with organic labels and sensors using bags or bins specifically allocated to them can be tracked along the supply chain. Consequently, provenance and attestation mean farmers receive their due credit for organic farming practices, while consumers receive timely insights that boost confidence in the products they’re purchasing.
Maintaining the optimum levels of quality and safety of goods during transportation necessitates a strict vigil during each of the supply chain processes. This holds special significance when it comes to transporting food and pharmaceuticals. Monitoring environmental conditions such as temperature, packaging, humidity and many more during transportation are very important for ensuring product integrity.
With Blockchain implementation, Organizations can hope to ensure the utmost of quality and safety of food along the supply chain by monitoring key criteria, such as temperature and humidity levels. Recording data on blockchain which anybody can see, from the IoT-enabled sensors that measure and send temperature and humidity data at various points along the supply chain. The shared ledger storing environmental data can be viewed by carriers, factories, wholesalers, consumers, retailers, and regulators.
Supply chain disputes in modern day logistics are a daily occurrence, and it’s critical to resolve them quickly and transparently for the sake of efficacy and time management. If the quality of assets have been compromised en route, or any of the supply chain participants fail to deliver assets on time and in full, the likelihood of dealing with fines increases manifold. Furthermore, look-back auditing for fault identification is often both error prone and costly.
Backed with blockchains’ immutable blockchain audit-log, organizations in a matter of seconds resolve supply chain disputes and that too with accuracy. Logistic participants in the supply chain could mutually negotiate and set-up smart contracts with agreements on environmental conditions, sourcing, and delivery timeline. The predetermined smart contracts immediately revoke payments, trigger fines, or pause production upon any violations in the agreed-upon conditions, before any mishaps affect the general consumer.
Reforming the supply chain and logistics industry is about making decisions, and organizations need updated, secure and authentic data for that. As the entire network contributes to data validation, Blockchain ensures instant access to trustworthy data across the transportation and logistics ecosystem. The novel technology promises unprecedented visibility for even the most complex supply chains, particularly when used in combination with sensor technologies such as IoT and RFID.
The coming future is going to be immensely influenced by the sweeping changes from blockchain technology in almost every aspect of modernity and economics. It has the power to replace complicated, error-prone processes with streamlined smart contracts. The distributed ledger would certainly be used to open new doors for cross-organizational collaboration, facilitating the migration to more efficient business models along the supply chain and logistics industry.