Blockchain technology continues to make its imprint on supply chain management. As it evolves in capabilities and as the supply chain adopts it, blockchain is transforming the industry in several ways.
Perhaps the biggest value that blockchain affords the supply chain is the ability to better trace transactions from start to finish, or from point of origin all the way to the consumer. As items move and their “ownership” changes hands, partners get a picture of where those items are when. As a result, every partner feels more confident in the process as accountability increases and the odds of fraud decrease. For example, when a retailer is moving grocery items in the supply chain, a simple scan of a QR code delivers it all the information it needs to learn the item’s point of origin, its ingredients and what its storage conditions are. This enhances food safety for the consumer in the event there is spoilage or contamination—think listeria-infected lettuce, for instance. The retailer can act swiftly and effectively to prevent it from getting to store shelves, or to remove it once it has hit them.
This traceability also helps improve inventory management. As supply chain partners receive live updates of where products are and in what quantity, they can better balance inventory, preventing some of the widespread shortages that were so common throughout the pandemic. In real time, partners can adjust up or down the amount of goods they need to order, keeping stock outs at bay, or preventing a glut of products from over-ordering.
Blockchain’s traceability also helps supply chains prevent counterfeit goods, an issue that has plagued retailers and e-commerce operations alike. When blockchain creates a digital history of transactions, it also serves to confirm whether the items are authentic. Counterfeiters are foiled by the difficulty of changing or fabricating product information. Customers receive the product they expect, and businesses can avoid black eyes because counterfeits don’t make their way across the supply chain. In action, this might look like an end customer having the ability to confirm the origin and ownership of goods they ordered, particularly useful in high-end luxury goods that are frequently subject to knock offs, like purses and watches.
Another benefit to the supply chain from blockchain is the ability to use it for financing. By digitizing traditional paperwork like purchase orders, invoices, and shipping information, blockchain provides real-time access to data. The transparency reduces risk to the lenders, making them more like to loosen their purse strings. With the data in hand, lenders can provide needed cash to qualified suppliers. Every partner along the supply chain benefits from the improved transparency because it results in an influx of expedited money. For instance, a Singapore-based finance company created a blockchain-based trade finance platform. Suppliers can receive financing at an accelerated rate thanks to the fact that the platform digitizes trade documents.
Blockchain is just scratching the surface at this stage—expect much more from this technology going forward. Contact OPSdesign today for all your supply chain consulting needs.
