Blockchain for Supply Chain: Benefits, Uses and Examples
Blockchain has been hitting the news more and more recently. The main reason is its increased use following the rising popularity of cryptocurrencies such as Bitcoin. Blockchain is, after all, the technology that allows cryptocurrencies to run.
However, blockchain is not only the driver behind the highs and lows of digital currency. It can also record transactions, which can be invaluable in some industries. For instance, blockchain can help document when you’re receiving or shipping products as part of your supply chain.
Using blockchain for the supply chain lets you track your products better. It helps create an efficient, transparent supply chain to tackle ongoing supply chain problems that started with the pandemic.
Suppliers have indeed fixed some of these issues. But there are still worker shortages and wars interrupting the supply chain that blockchain can help with.
The Impact of Blockchain in Supply Chain
A blockchain is a digital record of transactions stored across a network of computers. How does this help the modern supply chains?
The supplier can use the blockchain to assign each item or batch a unique digital identification, such as a QR code. Every time a supplier transfers a batch, the new handler creates a record. Each record is a block. The block holds all the details about the transaction, such as who handled it and where they sent it. The blockchain platform links all the blocks together to form a chain. We also know these as blockchain ledgers.
Once the platform adds a block to the chain, no one can change or delete it. Every computer in the network has a copy of the record, so the platform knows immediately if someone tries to tamper with it.
Ultimately, a blockchain provides a single source of truth about complex supply chains.
Key Benefits of Implementing Blockchain in Supply Chain
Blockchain software keeps all supply chain participants on the same page. It’s a central authority for every step along the way.
Let’s explore in detail the benefits of blockchain in supply chain technology:
Enhanced Transparency and Traceability
Blockchain lets manufacturers track their product’s components from origin to the finished products. For example, if you’re manufacturing electronics, you can trace the origin of your raw materials. This will help you make sure they meet your environmental and ethical standards.
The level of detail the blockchain provides helps maintain quality and increases customer trust. People want to know the origins and ethical standards of the products they buy.
You can also use blockchain to spot any potential issues with your raw materials that may impact your production schedule. For example, you might discover that a government cut off a trade route because of a natural disaster. If you know ahead of time that you won’t have the supplies you need, you can make other arrangements.
Improved Safety and Reduced Fraud
Once someone records information about a transaction or a product on a blockchain, no one can change it. You’ll know no one has switched your products for fake ones.
US businesses lose over $200 billion per year to counterfeit products. In addition to the financial costs, counterfeits can damage your brand reputation. Blockchain provides a foolproof way to ensure the products you sell are genuine.
Streamlined Processes and Efficiency
Blockchain eliminates many manual supply chain jobs. These include entering tracking information by hand.
Automation saves money and time and reduces human errors that happen in traditional supply chains. By automating transactions in your supply chain through artificial intelligence (AI), blockchain applications help you move products faster. You’ll also be able to optimize your resources and reduce waste, such as inventory loss and increased labor costs.
Blockchain Use Cases in Supply Chain
Every industry can benefit from supply chain tools built in the blockchain ecosystem. Some common use cases include:
Blockchain for Food Traceability
Businesses that sell or produce food must be able to act fast in the event of a food-borne disease outbreak. With blockchain, you can track every supply chain stage. You can follow your product’s journey, from where the farmers grew it to where the store sold it.
If there’s a salmonella outbreak in your products, you’ll know immediately. You can tell who sold or ate your product. With this information, you can act quickly to prevent people from getting sick.
Blockchain for Pharmaceutical Supply Chains
Counterfeit medicine is a problem that can harm patients worldwide. Drug companies can track their supply chain on the blockchain to guarantee the authenticity of their products. This proof of chain of custody protects the health of patients and the reputation of the company and provides a record of legal compliance.
Cross-Border Trade and Blockchain
International supply chains are the norm for today’s businesses. But although they allow you to source the best and most cost-efficient goods, they also come with challenges.
Working with trade treaties and laws in different countries is tricky. Your supply chain may span many countries. Each one has its own set of trade regulations, and they may conflict with each other.
Blockchain simplifies the process by providing a safe and transparent way to track all transactions and movements of goods with smart contracts. Developers build smart contracts into the blockchain. Then, the contracts execute automatically when each party meets the preset conditions.
Sustainability and Blockchain in Supply Chain
Consumers care and worry about sustainability. Companies across industries will have to adjust their plans to resolve these concerns.
Blockchain applications can provide a clear record of your supply chain. They can prove your products came from sustainable sources.
Using blockchain in your supply chain helps you learn where your products come from. You can show consumers you aren’t using forced labor or environmentally harmful practices.
Blockchain can also record sustainable sourcing details related to your supply chain. This might include information about carbon emissions and energy usage. More investors want to see environmental, social, and corporate governance (ESG) policies. Blockchain can help you comply.
How To Implement Blockchain Technology in Your Supply Chain
Your supply chain consists of many parts. Your approach to using blockchain may vary depending on the part. However, these are some best practices you can follow for successful blockchain implementation:
- Determine your goals. Your first step is to outline what you want to achieve. Do you want to use blockchain to increase supply chain transparency, stop counterfeiters, or reduce costs? You can accomplish multiple goals with blockchain. But setting your top priorities will help you narrow your focus to begin replacing your legacy systems. Include all relevant stakeholders in your planning. You’ll get a broader range of perspectives and have a higher buy-in rate.
- Choose a blockchain platform: You can choose from different blockchain platforms, including private blockchains and public blockchains. Research your options and choose the one that best fits your needs. Consider the platform’s ability to grow with your business, its features, and how well it works with your existing systems. Before you fully commit, start with a small project to test the blockchain in a real-world environment. It will help you plan for any challenges you’ll face when you do a full-scale rollout.
- Partner with an expert: Unless your organization has an in-house development team, your best option will probably be working with an outside company. A trusted and experienced partner can make upgrading to blockchain much faster and more efficient. They’ll know the best methods and practices to avoid common pitfalls. They can also customize the blockchain to your needs. If you need more features, such as electronic signatures, some can provide them as well.
- Integrate with existing systems: You probably won’t replace your entire supply chain with blockchain solutions in the beginning. You’ll need to integrate with the technology and tools you currently use. To make different systems work together, they must share data. Sharing data can be a safety risk. Your solution must protect your data and control who has access to it. It must also follow all privacy laws and regulations you have to follow.
- Implement in phases: When you find a solution that meets your needs, put it in place gradually to shorten downtime. You’ll run into challenges, but you can handle them as they happen. You can apply the lessons you learn in the early phases to make the latter go more smoothly.
- Monitor and optimize: One of the benefits of using blockchain is the large amount of data it generates. You can leverage this data to track and optimize your supply chain. Use the insights you gain to drive improvements in sourcing, producing, and delivering your products.
Enhance Your Supply Chain Management With a Blockchain-Based Solution
Today’s supply chains are complex networks of different processes. The good news is you can use blockchain to track many activities related to the supply chain. This comprehensive overview can help avoid common supply chain disruptions and problems.
Consensus Cloud Solutions can help you connect the blockchain to your supply chain seamlessly. We are a global leader in the safe exchange of digital information and provide a single place for tracking data from multiple sources. Conductor, our interface engine and interoperability platform, connects all types of data and systems into one platform for easy use and enhanced business efficiency.
Also, Consensus Cloud Solutions offers workflow automation solutions. You can bundle or use them independently to improve productivity, cut costs, mitigate human errors, and more.
Reach out today to our experts for a free demonstration.