A New Era of Transparency: The Role of Blockchain in Supply Chain Management
Blockchain technology has taken the world by storm, offering immense potential in various industries. One such industry is supply chain management.
How Blockchain Benefits Supply Chain Management
Supply chain management is a critical business process that involves the movement of raw materials, work-in-progress inventory, and finished goods from the point of origin to the end consumer. To succeed in this process, companies must ensure that their products are delivered on schedule, at the lowest cost, and with maximum efficiency.
Blockchain technology is a distributed digital ledger that enables secure transactions, exchange of agreements, and smart contracts using cryptocurrencies. In supply chain management, by leveraging the capabilities of blockchain, businesses can track their products from the point of pickup to delivery to the end consumer, thereby improving transparency, reducing fraud, and minimizing tracking fees.
In a blockchain-based supply chain, participants can record critical information such as price, date, location, quality, and certification to enable effective management of the entire supply chain. This level of visibility can help increase traceability of the material supply chain, reduce losses from counterfeit and gray market trading, and improve visibility and compliance over outsourced contract manufacturing.
Blockchain in Supply Chain Management: Use Cases
The use of blockchain in supply chain management is not new, as it was first introduced into financial services for efficient and secure payments, trade agreements, etc. Recently, multiple companies have started examining how to enter into blockchain applications.
One of the most significant applications of blockchain technology in supply chain management is payments in automotive suppliers. For instance, Tomcar, an Australian vehicle manufacturer, pays its suppliers through bitcoin. Three other partners in Israel and Taiwan have also adopted this mode for their automotives.
In terms of the food industry, consumers today demand more transparency, and over 90% of them consider this a critical factor impacting their purchase decisions. Walmart uses blockchain to track its product to the end consumer. Walmart tracks its pork meat product from China where blockchain keeps a record of the piece of meat from the order placed to the date it is sold to the consumer. Through this tracking function, investigators can also find and remove the sources that provide food-borne diseases and list out those factories. Nestle, Unilever, and Tyson also use blockchain for similar purposes.
Blockchain technology is also useful in monitoring the cold chain of products. It helps record the humidity, temperature, vibration, and other parameters, which are stored on the blockchain and are tamper-proof and permanent. If the storage condition changes from what has been agreed, then all the blockchain members will see it, and a smart contract comes into the frame to correct the situation. For example, the French company Veritise offers a complete full track solution.
Blockchain’s transparency can also help reduce fraud for high-value goods such as diamonds and pharmaceutical drugs. According to the Organisation for Economic Co-operation and Development, counterfeit goods account for over $450 billion in trade annually, and an estimated 10–30% of medicines sold in developing economies are counterfeits, leading to hundreds of thousands of deaths and billions of dollars in revenue losses globally.
Blockchain has the potential to revolutionize supply chain management, enabling businesses to improve their transparency, reduce fraud, streamline administrative processes, and build a reputation as leaders in responsible manufacturing.
The French Federation of Blockchain Professionals is committed to advancing the adoption and utilization of blockchain technology in various sectors, including supply chain management. Stay informed on the latest blockchain news and events by following us on social media, and learn how you can participate in the blockchain revolution.