How Blockchain Can Help Solve the Current Supply Chain Crisis
While it’s usually associated with cryptocurrencies, blockchain technology has shown potential in boosting business solutions. Innovative technologies, materials, and directives have created new demands for essential processes like the supply chain, and industry players are now looking into blockchain tech to meet these new and ever evolving needs.
As the world consumes more virtually, the need for secure, transparent, and efficient technology like blockchain arises. But despite being available for quite some time now, not all essential supply chain players like vendors, distributors, and retailers have a clear grasp on the relationship between blockchain and the supply chain. With that said, we’ve listed down the key ways blockchain helps solve our modern logistics problems.
Digitizing Outdated Systems
Even though it’s been long established that paper-based ledgers are not secure, unsustainable, and downright inefficient, supply chain operators still predominantly use this old-school system. While paper documents have an advantage in the form of availability without the use of technology, processes involving these kinds of documents tend to be slow and disorganized.
Take the case of paper bills of lading. Shipments pass through a lot of places and people, and these all warrant individual bills of lading — so this outdated system rakes up unnecessarily high costs, is prone to fraud, and heightens miscommunication issues. In light of this, Alexander Whiteman recounts how shipping venture G2 Ocean decided to take things into their own hands and employed CargoX's blockchain-based bills of lading system. Employing blockchain technologies like this has proven to be successful, as the system stores encrypted documents and data on a globally accessible blockchain without necessitating shipping companies to implement new infrastructure.
On the legal side of supply chain management, James Gonzales points out how the blockchain makes smart contracts and long-duration records possible, which simplifies record-keeping and legal documents for supply chain participants. Through blockchain, tedious legal and accounting woes can now be dealt with securely and virtually without needing the physical presence of concerned parties. Furthermore, blockchain technologies create a network of digitized documents that are not restricted by geographical bounds without sacrificing security — significantly enhancing every step of the supply chain process.
Traceability and Transparency
The supply chain heavily relies on the traceability and transparency of goods to function seamlessly. In the case of some industries like food and pharmaceuticals, traceability is emphasized as perishable goods and drugs always have a safety concern. If traceability is enhanced, the supply chain will become more efficient, become more connected with upstream players, satisfy regulatory compliances, and increase a product’s appeal by detailing its journey to a consumer.
Blockchain improves the traceability of the supply chain through its distributed ledger technology. In fact, retail giant Walmart Canada has launched a blockchain-based freight network to improve its operations. With this technology, Walmart’s blockchain system will combine, control, and organize the logistics and supply chain data in real-time — making it easy to find out the source of goods and easily review each one's journey before landing in store shelves.
Transparency is also one important facet of the supply chain that is boosted by blockchain technology. Since all transactions can be recorded in a blockchain ledger, stakeholders can check the supply chain status whenever they please. This can improve the relationship between supply chain participants and their partners, as the decentralized blockchain system is immune to fraud and duplicity issues. Countries like the Maldives have recently decided to use blockchain tech for this specific reason, as they’ve seen a spike in their trading records. While it’s still early to tell if an end-all blockchain solution is viable on a national level in the long term, the initiative of creating a blockchain-based trading platform will only ameliorate the level of trust between different industries in the supply chain.
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