Blockchain in Supply Chain
Dec 12, 2021
Supply chain and logistics have come a long way with the onset of digital solutions and new-age technology. What used to be an arduous process of recording and monitoring the movement of goods has been digitized and streamlined to improve efficiencies and drastically improve lead times on supply chain cycles. Take sourcing a product through Amazon for instance – what would earlier have taken weeks to process and deliver can now be done in a matter of days if not hours thanks to their automated warehousing and last-mile delivery solutions. However, with the improved efficiency and added pace of movement of goods, the risk of leakages and malpractice has increased as well.
From horrifying tales such as the China Milk Scandal of ’08, where baby formula was diluted along the supply chain with melamine to inflate/misappropriate produced goods, to the estimated millions lost due to counterfeit goods, the supply chain of any product has been an area where there is significant need for traceability from farm to shelf. Companies such as BMW are constantly analyzing and trying to mitigate the impact of billions of dollars’ worth of counterfeit parts being circulated in the market as most of these get sold to unknowing customers. The consumer can no longer rely on the source or authenticity of products given the tremendous improvements in the logistics and shipping along the supply chain. So how could Blockchain play a part here?
Projects like Vechain intend to create fully traceable supply chains by equipping players along the production cycle with sensors that record data from digital tags (RFIDs or NFC chips) upon fixed durations or each time the product moves from one point to another. By having companies integrate such a Blockchain solution to trace their products from raw material till final good, consumers can gain significant insight into the history of the good they are purchasing or consuming. As the chain itself is trustless and the recording is automated, this gives reliable tamper-proof data for the company to analyze while giving the consumer access to data that has already been verified algorithmically. This application of blockchain to improve the visibility and traceability along the production cycle among various participants in the supply chain helps consumers gain confidence in their purchases while allowing companies to track how sustainable their production cycles are. There is also the added benefit of being able to identify the locations or players that have malicious or negative impact on the supply chain and thus to take necessary actions to mitigate these risks.
With projects like IBM Tradelens and DNVGL Mystory, companies are using Blockchain to make their supply chain transparent, thus saving billions of dollars otherwise lost to gaps within the supply chain while facilitating consumers to trace and verify the authenticity of their products. Brand identities, social awareness and green movements are safeguarded with this added transparency in the supply chain and Blockchain aims to bring an otherwise clouded environment into a trustless, reliable database. Gone are the days where the consumer has to rely on the word of the corporates and the days where corporates have to write-off costs due to gaps in their supply chain. The age of trustless information is upon us!