Blockchain technology significantly impacts supply chains, providing a more secure and comprehensive way to track transactions. Through a temper-resisted distributed ledger, companies can oversee a product’s history from its origin to its current location while securely documenting each iteration from manufacturing to sale.
With this disruptive technology, parties can operate on a shared platform, reducing time delays, added costs, and human errors associated with transactions. Organizations can quickly identify fraud sources and prevent data breaches by eliminating intermediaries and keeping comprehensive records. Overall, the shared blockchain ledger ensures a trusted and tamper-resistant audit trail of inventory data and financial information within a supply chain. Hence, organizations synchronize logistics, monitor shipments, and automate settlements while only sharing relevant data without significantly modifying their existing systems.
Blockchain in supply chain use cases
In a blockchain network, supply chain transactions are initiated by authorized participants or smart contracts triggered by a pre-defined event. For supply chain security, permissioned blockchains are generally used, allowing only members with special rights to validate data.
Blockchain data is stored chronologically in timestamped blocks after validation and encryption through a hash function. As a result, a distributed ledger provides a reliable source of truth to oversee supply chain activities and authenticate inventory origins.
Transparency and better control over supply chain operations can be achieved through end-to-end visibility of all supply-related data and transactions. In addition, traceability facilitates prompt and collaborative resolution of operational issues, including supplier information, procurement, and goods delivery. For instance, a distributed ledger technology (DLT) is a decentralized database where transactions and data are recorded across multiple nodes, ensuring data immutability and security.
Blockchain allows recording and tracing data related to inventory movement between multiple facilities and stock availability monitoring across different locations. This, in turn, fosters streamlined inventory control and ensures timely replenishment by identifying issues instantly and making appropriate adjustments accordingly. For example, blockchain oracles are external data providers that supply real-world information to blockchain networks, enabling smart contracts to interact with off-chain data sources and triggering their execution based on real-world events.
Thanks to blockchain capabilities, a supplier’s interaction history, performance information, and documentation (including accreditations and certificates) are recorded and monitored to ensure responsible sourcing practices and mitigate legal and commercial risks. This results in robust and resilient supply chains, immune to fluctuations in stock levels and delivery terms.
Managing the movement of goods, pricing, and payments across different contractors, suppliers, intermediaries, and third-party services in supply chains can be challenging. Traditional invoice payment terms can take weeks or months, whereas using blockchain-based smart contracts, payments can be made instantaneously.
The transparent nature of blockchain technology can help create a payment system that all parties in a supply chain can access, eliminating digital fraud or human error. In addition, blockchain-based cryptocurrencies enable supply chain players to make payments without relying on banks, reducing fees and speeding up transactions.
In particular, the Ripple network is a decentralized, blockchain-based financial network designed to facilitate fast and secure cross-border payments. It connects banks, payment providers, digital asset exchanges, and corporations to enable more efficient transactions and financial management in supply chains. Ripple offers decision-makers faster payments, reduced costs, end-to-end transparency, smart contract capabilities, and interoperability. In summary, this decentralized financial network can significantly enhance finance management in supply chains by providing a faster, more secure, and cost-effective solution for cross-border transactions and seamless integration with other financial systems.
Blockchain provides a similar assurance for document flows within companies. All documents entering and leaving the organization can be validated and verified by utilizing distributed networks, either anonymously or in a private, bounded network.
In a blockchain-based file system, each document is assigned a unique fingerprint (an algorithm-generated ID) that allows users to identify and track its location, origin, and modification history. The information is accessible to authorized members only, ensuring maximum transparency in document processes and facilitating approvals in work processes. Also, the blockchain-based system eliminates the classic problem of duplicate files by automatically recording any changes made to a document.
Furthermore, powered by zero-knowledge proofs (ZKPs) cryptographic methods, parties can manage access to confidential data without revealing sensitive information. Essentially, a ZKP lets one party (the prover) demonstrate to the other party (the verifier) that they know a certain piece of information without divulging it. Applications like digital identity management can use this technique to prove identity without disclosing personal data.
Namely, Filecoin is a decentralized network that aims to transform cloud storage into an algorithmic market, leveraging blockchain technology to facilitate secure, efficient, and transparent document management.
Through immutable documents as proof of responsibility transfer for commodities, automated e-document filing, and tracking of location and storage conditions during transit, blockchain can streamline administrative procedures, improve transportation timelines and comply with logistics requirements.
Blockchain technology has emerged as a promising solution to address the challenges faced by the supply chain industry, including transparency, traceability, and security. By using a decentralized, immutable, and transparent ledger, blockchain can create a shared and trusted network of information among all participants in the supply chain. This can enable better collaboration, real-time tracking, and efficient management of the entire supply chain process.
Blockchain technology facilitates the tracking of goods by all stakeholders in the supply chain, including the location of containers and the status of customs documents. This technology offers secure data exchange and tamper-resistant storage of essential documentation, such as bills of lading. For instance, Maersk, a prominent Danish shipping company, and IBM have collaborated to develop a global blockchain-based system that digitizes logistics workflows and enables end-to-end shipment tracking, resulting in greater efficiency in ocean freight.
Walmart, an American multidimensional retail corporation, has enhanced supply chain transparency and provenance tracking by utilizing blockchain technology. Employing a decentralized database, Walmart can identify the source of foodborne illnesses and contamination, ensuring optimal food monitoring, traceability, and safety. With blockchain technology, Walmart can guarantee product quality, save money, and promote accountability, quickly detecting and discarding affected foods before they reach the consumer.
Furthermore, Walmart allows customers to scan products in-store and obtain immediate information on their origin and logistics processes from source to retail outlet.
With the growing demand for speedy delivery services, traditional tracking technologies may no longer be sufficient. With blockchain technology, transport, and delivery firms can track and verify orders more efficiently, improving the quality of their services. Innovative blockchain-based platforms enable companies to manage their documents and information in a distributed ledger, thereby reducing paperwork and improving data flow and communication. Also, in the transportation industry, blockchain serves as a dependable tool for verifying data and aiding in tracking truck routes, fleets, traffic incidents, and other associated operations.
For instance, in February 2018, FedEx joined the Blockchain in Transport Alliance (BITA), the world’s most distinguished commercial blockchain alliance. BITA is an organization that brings together members from the transport, logistics, freight, and related industries with a shared mission to promote and implement new technologies.
The transparency inherent in blockchain builds trust among stakeholders throughout the manufacturing process, including procurement, shop floor operations, distributors, and customers. Contract drafting and enforcement, supply chain tracking, counterfeit detection, intellectual property management, asset tracking and monitoring, inventory management, regulatory compliance, and quality control can all be optimized thanks to decentralized technologies.
Blockchain can streamline various business processes, increasing a company’s potential time-to-market. As a result, supplier order accuracy, product quality, and delivery rates can improve, ultimately leading to higher customer satisfaction and increased revenues.
Ford, a prominent automotive company, has incorporated innovative technology as a standard practice. Together with IBM, they seek to trace the source of their raw materials, with a specific focus on cobalt, from their suppliers. This joint effort aims to preserve product quality while guaranteeing authenticity.
Following extraction, the cobalt is recorded on a ledger, allowing Ford to monitor its movement from that stage onwards. This method promotes transparency in its supply chain management, enabling Ford to offer its customers high-quality products and upholding their commitment to ethical and sustainable sourcing practices.
Blockchain technology enables the monitoring of various aspects of plants, including seed quality, crop growth, and post-farm journey. Such information promotes supply chain transparency, mitigating illegal or unethical production concerns. Moreover, it aids in identifying the source of contamination or issues during recalls, emphasizing sustainability and food security. Providing consumers with access to this level of transparency empowers them to make informed decisions while purchasing groceries.
One example of an initiative in this regard is AgriLedger, a social enterprise based in the UK. It aims to assist farmers in tracking their food’s origins, acquiring better financing, and storing transactional data.
Blockchain technology has the potential to significantly enhance supply chain management due to its disruptive capabilities. Its highly reliable, transparent, and anti-tampering features can improve connections between raw material suppliers, manufacturers, distributors, wholesalers, and retailers, resulting in various benefits outlined below.
Due to its interconnected and comprehensive bridging of actions, blockchain facilitates easy mapping and visualization of supply chain steps. This improves the blockchain traceability of every element, such as monitoring supplier data, procurement, delivery, and more.
Blockchain helps to establish trust among supply chain participants by providing transparent access to critical data points it captures, thereby instilling confidence in trade transactions without intermediaries.
Smart contracts in blockchain are sections of code in a single block that automatically update actions when specific conditions are met. This capability replaces slow and manual processes that require repetitive, time-consuming confirmations.
A blockchain is a distributed ledger with multiple copies, so altering one copy at a time is nearly impossible. This makes the use of innovative technology highly reliable and fraud-resistant.
Transactions in a supply chain must follow each other successfully if all parties agree. Blockchain is advantageous for ensuring and maintaining consensus over the process since all the users comprehend that the transactions are automated and verified.
As a top-tier service provider, Innowise Group taps into blockchain capabilities to embrace supply chain transparency, security, and efficiency. Our vetted developers build smart solutions that bring high ROI, improve operational excellence, and drive revenues. We are dedicated blockchain enthusiasts committed to making the world more technologically advanced through digitization and innovation. Choose us if you are searching for an all-in-one solution that ensures the stability and predictability of your supply chains.
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