29 Dec Blockchain is Disrupting the Supply Chains
Blockchain is disrupting the supply chain industry rapidly. Monitoring and maintaining today’s supply chains is very complex and all the more so when managing any supply chain, from the time the goods leave the manufacturer to the shipping up to the distribution. Depending on the product, any global supply chain can span a multitude of stages, a throng of international locations, a horde of payments and invoices, have literally hundreds of individuals and entities involved, and can last up to several months.
Blockchain can automate the purchase process, improve transaction flows, increase traceability and transparency, reduce cost, offers quality assurance while validating the provenance of the commodity. Blockchain technology provides a lot of opportunities to transform the supply chain industry.
supply chains are broken
Historically, right up to the end of World War II, the supply chain was not that complicated and commercial trading seemed simple in those days. Today, technology and businesses have made global trading and supply chain management more complicated. And as the supply chain becomes more complex, it becomes less transparent. The global supply chain is literally broken.
Since manufacturing has become globalised, and a large portion of manufacturing is done in second-and third-world countries, the current supply chain system has become very difficult to trace the provenance of goods. Consumers cannot even find out the real value of products because the logistics and supply chain lacks transparency. It is also extremely difficult – if not impossible – to investigate supply chains for illegal and unethical practices. Suppliers and vendors as well turn a blind eye to these activities so long as the goods and products arrive safely and intact.
Challenges facing the logistics and supply chain industry
Today’s supply chain management involves a lot of intermediaries, including regulators and barristers. All this adds extra high costs to global trading. Many supply chains are also too dependent on middlemen to bring trust to the process.
The lack of transparency brings a lot of counterfeit cases into the supply chain process anywhere and everywhere. Counterfeit and pirated imports – mostly from mainland China – can make the global economy lose up to a half-trillion dollars, annually! Counterfeit products not only affect the global economy, it can also affect the lives of consumers. Substandard counterfeit products have been known to cause everything from sickness to accidents and even death.
Complexities of documentation
Contracts can become complicated and confusing because of long paper-trails due to complex payment terms, bills of landing, letters of credit, and ownership verification. Maintaining paper records is cumbersome, especially when attempting to find old records.
Lack of traceability
The ability to trace any specific product means knowing where said products are in the circulating supply chain at any one time. Currently, however, each country or region in any supply chain network manages its own databases and system. This makes it challenging to do predictive monitoring and analyse where the product is at a particular time.
How can blockchain transform supply chains?
Blockchain has always been known by everyone in connection to cryptocurrency – bitcoin to be exact. However, blockchain and bitcoin are two very different things. Blockchain is the technology that bitcoin and other cryptocurrencies are built on.
Blockchain is a distributed ledger protocol that can also be used for other applicable exchanges, agreements, contracts, tracking, and payments. Every single transaction is recorded on a block and across multiple copies of the ledger. These multiple ledger copies are then distributed over many nodes or computers, making it highly transparent. This makes blockchain very secure and transparent, because every block links to the one before it and after it, making it extremely efficient. No central authority oversees the blockchain, such as those used in banks. Blockchains cannot be changed, altered, modified, counterfeited, or corrupted without every node and every block knowing about it. It is invulnerable to hacking and other cybercrimes.
When blockchain is used in supply chains, it can completely change and enhance the efficiency and transparency of supply chains and improve efficiency even in the running of warehouses, deliveries, and payments.
Blockchain can impact supply chains immensely by:
- The ability to share vital information about processing and processes of manufacturing, delivery, assembly and maintenance, vendors, and suppliers in the most transparent manner.
- Properly linking products to serial numbers, RFID, and bar codes and storing them on the blockchain.
- The ability to transparently track the blockchain ledger for sensitive documents such as receipts, trade papers, shipment notifications, buy orders and invoices, payments, and changed orders.
- Recording the transfer and quantity of products as they change hands between different supply chain networks.
- Removes is the unnecessary use of intermediaries or middlemen. Removing middlemen from supply chains reduce the chances of product duplicity, fraudulent transactions, counterfeits, and therefore prevents extra costs. And instead of depending on intermediaries and middlemen, processing of documents and payments can be done directly between parties of the supply chain using blockchain.
Is blockchain being used today in supply chains?
Yes, many companies such as IBM are exploring how blockchain can improve their supply chains and are working with supply chain partners to develop applications. There are even companies right here in Australia using blockchain in the supply chain industry.
One example is EVERLEDGER. It uses independent blockchain platforms to provide a secure and permanent distributed ledger of any product’s origin, characteristics, and ownership so it can be tracked and monitored transparently. This is important to EVERLEDGER because the products they deal with are extremely diverse, such as diamonds, precious gemstones, apparel, batteries, wine, spirits, art, e-recycling, and luxury goods, to name a few. In the case of diamonds, the blockchain records and tracks from the origin to the retailer/vendor to ensure consumers, suppliers, and vendors that the finished products did not originate from “blood diamonds” and illegally obtained.
Another example is Geora. The company provides blockchain infrastructure for the agriculture sector for more sustainable, efficient, secure, and transparent monitoring of agricultural assets, agri-supply chains, and the origins of where the food products come from. Geora is the outcome after three years of a blockchain pilot by a company called AgriDigital. Agriculture is a very critical industry and Geora mission is to give the best digital platform that technology has to offer to assist in sustainable development.
Careers in blockchain supply chains
As the growth of distributed ledger technology the demand for qualified professional rises. The future to transform and improve the supply chains of the world can be done with individuals adept in the creation and use of blockchain. Why not try your hand with a career shift towards blockchain application?
Blockchain Collective is an educational body working with Registered Training Organisations (RTOs) and Universities to deliver a benchmark standard of education that empowers professionals and students with the necessary skills for a future in blockchain technology.
The Advanced Diploma of Applied Blockchain 10747NAT is the first-ever in Australia. This course, and the Diploma of Applied Blockchain 10849NAT, also created by Blockchain Collective, are designed to equip people willing to gain knowledge and experience in applying blockchain technology frameworks to any kind of supply chain network or business framework.