From start to finish, supply chains are complex to manage. Consumers are unaware of the processes needed to create and produce the products they desire. If supply chains were transparent, consumers would be able to see where the raw material for the item came from, where it was shipped, what happened to it, etc. Basically, the curtain would be lifted from start to finish.
In the not-so-far future, consumers will be able to see just that—transparency from beginning to end—with the assistance of blockchains. This emerging technology is transforming the supply chain landscape by increasing transparency and efficiency among a wide variety of industries.
What is Blockchain?
From a very high-level perspective, blockchain is a record-keeping method that makes it easier and safer for companies to conduct business with each other over the internet. To dive into the specifics, blockchain is a digital ledger that registers the chronological transfer of goods from business to business and location to location. Each party in the supply chain would have access to the same ledger and would be able to add it to, much like how Google Docs allows multiple users to edit a document at the same time. Every time a product changes hands, the transaction would be recorded. As a result, a permanent history of the item is created from the manufacturing stage all the way to the sales stage. Additional information such as dates, prices, quality, and current state can also be added to the ledger.
A key feature of blockchain is that the online ledgers are tamper resistant. Users can access the data, inspect it, or add to it, but in no way, shape, or form can they delete or change what has already been added. This feature is due to their cryptographic nature, making it next to impossible to tamper with. Therefore, no company would be able to manipulate the data. Some experts state blockchain is unhackable. The original information would stay put, leaving a permanent—and public—information trail.
As this information is public to absolutely everyone, blockchain allows consumers to verify the products they have paid for. Consumers can feel better knowing their jewelry didn't fund wars and oppressive regimes, their clothing didn't come from slave labour, or the creation of their kitchenware had minimal environmental impacts.
Effects Blockchain will have on Your Supply Chain
Blockchain could potentially improve a number of tasks/areas required in supply chains. You would be better able to record the quantity and transfer of assets; track purchase orders, shipment notifications, and receipts; and link physical products to serial numbers or digital tags. Blockchain can also help with assigning properties to specific goods (i.e. this is fair trade coffee) and share need-to-know product information with vendors and suppliers.
This technology's benefits are numerous. The enhanced transparency blockchain creates reveals a product's true origins and multiple touchpoints. It also creates a self-generated audit trail for companies. The ledger offers better security as well. Codified rules could eliminate the need for audits required by an organization's internal processes. Lastly, blockchain can further enhance innovation. Opportunities can be explored as to how to better utilize this creative technology.
Another advantage of blockchain technology is that it can reduce business expenses. As every single transaction is documented, the technology can reduce costs associated with time delays and human error that finds its way into many regular transactions. IDC analyst Robert Westervelt stated blockchain could potentially solve costly challenges in tracking high-value goods and services by expediting the validation of transactions between numerous parties along supply chain routes. When all businesses have a complete copy of the ledger, they know where money needs to be sent, allowing banks to increase the processing rate, which saves both time and money.
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Blockchain technology will make previously confusing and opaque supply chains transparent and easy to follow for both consumers and companies that contribute to it. Because the ledger is extremely hard to hack, the data is true and creates trusting relationships. Blockchains provide many advantages for supply chains to capitalize on including reducing costs and increasing the accuracy of records. With blockchains, supply chains will no longer be hidden under a heavy veil.