Is your supply chain business ready for blockchain? Cryptocurrencies like Bitcoin and Ethereum have captured the public’s imagination, but the technology underlying them has far-reaching blockchain applications for supply chain management.
As reported by Allied Market Research, the global blockchain supply chain market size was valued at $ 93.16 million in 2017 and is expected to reach $ 9,852.91 million by 2025, with an increase in a CAGR of 80.2% from 2018 to 2025.
From increased security to tracking the provenance of goods, blockchain for supply chain has the potential to streamline and make the supply chain platform more efficient.
According to Bloomberg, the 50 trillion supply chain industry is making a huge shift to the blockchain.
What is blockchain?
Blockchain technology is a distributed database that allows for secure, transparent, and tamper-proof record-keeping of the data.
In supply chain management, the focus is often on efficiency, transparency, traceability, and cost reduction. Blockchain can help with all these objectives.
For example, an iPhone is designed in the US but its components, suppliers, or sources are in 43 countries. These parts go through their own manufacturing process that involves a number of paperwork, including different transactions and interactions.
So, to know about each and every step from its origin to its delivery, blockchain is floated as one of the best solutions that could streamline the entire operations efficiently and securely.
Benefits of blockchain in the supply chain
Blockchain development companies using blockchain technology in the supply chain logistics can expect to witness several benefits, including:
1Supply chain transparency
The market provides a single view of the truth that can be shared with all stakeholders. Users can upload their information and data related to the product. This collection of data improves accountability and trust between the partners.
The technology can provide updates related to the product in real-time that helps businesses know when is the delivery and where is the product, all in a single platform.
According to Deloitte, participants can record date, location, quality, quantity, certification, price, and other product information by using blockchain in supply chain.
2Inventory and cargo tracking
Blockchain usage allows tracking the movement of goods throughout the supply chain. Global supply chains are often complex, with goods moving between different countries and businesses. As one of the major benefits of blockchain, businesses can trace the origin of their goods and ensure that they are complying with regulations.
Moreover, when you look at the blockchain applications and blockchain usage in the supply chain you will know that it can help businesses track their inventories, manage their logistics, and even automate their supply chain processes. This transparency allows businesses to make better decisions and avoid disruptions in their supply chain logistics.
For example, Walmart, one of the biggest retail giants, is already using blockchain technology in its food supply chain in order to add transparency to the decentralized food supply ecosystem. By integrating blockchain in supply chain management, the company is able to track the origin and condition of the pork items coming from China.
3Authentication and quality check
Studies show an annual loss of approximately 1.6 billion tons of food, 40% of which is spoilage during transportation and delivery. Furthermore, as reported by CDC, most of the spoilage part goes to the consumers that cause foodborne illness, which in turn leads to hospitalization and deaths alone in the United States.
This can be prevented by blockchain usage as all the data related to food safety, date of manufacturing, packaging, delivery and other information is securely stored in blockchain. The data is updated in real-time and can be accessed by all the stakeholders involved.
This would help businesses to take preventive measures to avoid any type of food-related issues and also maintain the quality of their products.
Maersk, one of the world’s largest shipping companies has partnered with IBM to launch a new system that will track freight traffic and exchange information between supply chain participants. The project is being developed on Hyperledger Fabric blockchain.
4Freight market launch
This needs to be noted that the freight market today is very inefficient with a huge number of middlemen. It is difficult to find carriers, track progress and manage payments. Additionally, the fluctuating prices of freight add to the inefficiency.
Blockchain technology and smart contracts can be used to create a fair marketplace for the freight market. Blockchain-based decentralized application (DApp), which is a blockchain-enabled software program that runs on a distributed network of computers, can be used to create a P2P network of shippers and carriers.
This will result in reduced costs as there will be no need to pay the middlemen and also market will ensure transparency and trust between the parties.
ShipChain is one such blockchain company that is working on bringing blockchain applications to the freight and logistics industry. Additionally, blockchain uses open-source smart contracts to automate the process.
Every day there are disputes between buyers and sellers, which often result in delays and added costs. Moreover knowing how to implement blockchain can help move in supply chain management. As all the data related to a transaction is stored in a distributed ledger. This data is tamper-proof and transparent, which means that disputes can be resolved quickly and easily.
To quote example, Ethereum’s blockchain platform is being used by a company called Provenance to track the journey of fish from the sea to our plates. The data is stored on the blockchain and is accessible to all the stakeholders involved. This helps to resolve disputes quickly and efficiently.
The rise of blockchain-based supply chain management platforms took place when consumers started to become more interested in where their products originated, was assembled, or made, and delivered.
The popularity of blockchain in supply chain management is because the technology can be used to create a decentralized marketplace for freight services. This will help businesses to find the best shipping routes and to avoid delays.
In the future, businesses who wanted to use blockchain in their supply chain need to find out why is blockchain important for their business. Enterprises also need to develop a clear strategy on how they will use blockchain to improve their supply chain operations and do more research on how to implement blockchain, blockchain uses, blockchain price, and various advancements in supply chain technology.
This can be possible by hiring a blockchain development company that can help them to develop and implement a blockchain solution for their business. As blockchain applications become more popular, the cost of developing and implementing a blockchain for supply chain will become more affordable for businesses.