Let’s explore the pros and cons of blockchain technology as it relates to the supply chain. The past few years have seen the development and advancement of many new tools with the potential to enhance supply chain management. Robotics, advanced software, the concept of the Internet of Things (IoT), blockchain technology, and of course, AI. To a degree, all are playing a role in modern supply chain management, and each continues to evolve. The level of sophistication for each of these tools varies from application to application, as does the value each can deliver.
It’s always worthwhile to continually evaluate these tools for your operations, both before and during implementation. Blockchain, right now, deserves scrutiny before embarking on a journey to include it in your mix. In large part, its benefits to supply chain management remain a mixed bag, to date.
As with many advanced tools, some of the earliest adopters of blockchain technology included big box retailers and grocers, like Walmart, Target, and others. Some have been using it for as long as five or six years, while others adopted it just a year or two ago. Results have been mixed, which may indicate issues with the technology itself, or the end user. Sometimes it’s both, or a lack of strong partnership.
In a perfect world, blockchain fosters immediate access to information about a product, its whereabouts in the supply chain, even the overall business practices of supply chain partners. If done well, it eliminates unnecessary steps in the supply chain, creates efficiencies, and saves costs. And sometimes, companies do pull it off well, enjoying the results.
The downside of blockchain technology
But there are also downsides to blockchain technology and ways in which it falls short for the supply chain in its current iteration. One of the caveats to blockchain is whether it’s at work in a public or private format. When only in a private format, blockchain can be limiting to the parties involved. The retailers, for instance, can check in on the origin of its expected products. Customers, however, don’t have that insight when blockchain is private, which can be problematic in the case of a recall or other instance.
Public blockchain, on the other hand, provides views to thousands of people, which serves to validate details about a product and its transport. If transparency is one of the promises of blockchain, keeping information public is essential. Yet most companies are loathe to work with public blockchain, for a variety of reasons.
Customers want to know they are buying authentic, safe products. At a moment when customer trust in corporations sits very low, keeping blockchain technology private can be a public relations miss. But even when blockchain is public, if it doesn’t provide tracking numbers on every product, there’s still a lack of transparency. Today’s customers want to know where their diamonds are sourced, for instance, and blockchain can provide that detail. When you don’t take advantage of that capability, you’re missing the mark.
Blockchain technology—like other next gen tools—offers much promise. But learn before you jump, researching all the pros and cons before you adopt it.
