When was the last time you bought a luxury item? Let’s assume a pair of glasses or a luxury watch. How can you prove that the item you bought is genuine and not a knock-off?
The product label and marketing might be misleading. How about the last time you had a salad? How can you tell where the spinach or lettuce come from and about the provenance of those ingredients, were they fit for consumption?
These examples represent the key challenges today’s supply chains are facing. These days, supply chains have become so complex that it has become incredibly difficult for the consumers and the buyers to truly know the inputs, values and other useful information regarding the products they consume. This is because of the lack of transparency in our current supply chain management system. And it has been equally difficult to investigate the supply chain when there is suspicion of illegal or unethical practices.
There are lots of vulnerabilities in the supply chains today. Leading retailers and food companies like Walmart, Nestle have already collaborated with IBM to implement blockchain based supply chain to make the supply chain more secure, transparent and efficient.
Let us now explore more on what blockchain can deliver in supply chain management. Basically, supply chain is all the steps that are involved in getting products from raw materials to the customers. The goals of supply chain management are multiple, among them, the goal is to fulfill demand efficiently, contribute to financial success and make customers happy. We’re all aware of the features of blockchain. Blockchain provides a single source of truth that is verifiable, tamper proof and unchangeable. Clearly, nothing could be a better solution for all these challenges in supply chain management than blockchain.
Since every transaction is recorded on a block and across multiple copies of the ledger that are distributed over many nodes, it is highly transparent. It’s also highly secure since every block link to the one before it and after it. There is not one central authority over the blockchain, and it’s extremely efficient and scalable. Ultimately, blockchain can increase the efficiency and transparency of supply chains and positively impact everything from warehousing to delivery to payment. Chain of command is essential for many things, and blockchain has the chain of command built in.
Supply chain efforts are to make sure that products get to the right person at the right time so that the customers are happy, and blockchain ensures just that. In-depth transformation of supply chains will not happen overnight. However, supply chains can already start using blockchain in some areas of their operations. Smart contracts can help eliminate costly delays and waste generated by manual handling of paperwork. From there, new doors may open to faster, more intelligent, and more secure processes throughout the entire supply chain.
As Ginni Rometty, CEO of IBM states,”We estimate that the application of blockchain to global supply chains alone could result in more than $100 billion in efficiencies. Add improvements in provenance and traceability of pharmaceuticals and food. In fact, I already see benefits for doing food safety with Walmart.”, blockchain could prove to be a boon for the whole process of supply chain management.