In a world stitched together by trade, the importance of blockchain in supply chain is paramount. Crypto and its underlying blockchain technology are transforming the supply chain industry in several ways. However, despite the several merits of blockchain technology, things aren’t as simple as they appear to be. This blog will discuss blockchain technology and its impact on the evolving supply chain.
Introduction to crypto and blockchain in supply chain
Many investors perceive blockchain as the underlying platform that powers Bitcoin, Ethereum, and Ripple. But not many know of blockchain’s applications related to supply chain management. The technology that powers popular investment avenues in the crypto world can also help organizations solve their supply chain-related challenges.
How blockchain technology is revolutionizing supply chain management
Blockchain technology revolutionizes supply chain management by increasing transparency, improving traceability, enhancing security, and enabling faster payments and cost savings by eliminating intermediaries. In other words, it enhances supply chain management’s efficiency, security, and transparency, leading to a more streamlined and effective process.
Understanding the basics of smart contracts and their role in supply chain
A smart contract is a simple document that contains the terms of agreement between a buyer and a seller. The digital contract includes a set of self-executing codes agreed upon by both parties. A decentralized network executes the codes based on predefined rules. Once a condition is met, the network executes the contract. It is important to understand the benefits of blockchain over a traditional contract—traceability and on-time payments. Smart contracts, therefore, deliver trust and quality.
The impact of crypto and blockchain on the global supply chain industry
Crypto and blockchain are redefining supply chain and contract management for businesses. The enterprise benefits in several ways: Traceability, on-time payments, quality control, dispute resolution, and automation via smart contracts.
Real-world applications of crypto and blockchain in supply chain
Many businesses have reaped the benefits of crypto and blockchain. Benefits extend beyond the supply chain to customer experience, business profitability, better governance, and improved transparency.
Traceability and transparency in the food industry
Blockchain brings traceability and transparency. The food industry is a case in point, where it ensures the safety and authenticity of food products. Blockchain’s secure and tamper-proof nature makes it difficult for counterfeiters to manipulate data, curbing the sale of fake food products. It also enables end-to-end traceability through real-time tracking of food products from the farm to the consumer, providing a secure and transparent record of all transactions and movements.
Enhancing efficiency and reducing costs in logistics
Visibility and control matter the most for all logistics service providers. Bottlenecks in shipments erode customer trust, delay shipments, and risk damaged shipments. Furthermore, delays increase the costs of handling, fraud, and even counterfeiting. Blockchain eliminates these risks and delves deeper into dispute resolution and quality control by automating the logistics process. Since these are real-time processes, there is huge potential to enhance efficiency and reduce costs.
Blockchain-based solutions for supply chain financing
In the supply chain, money is both an asset and a need. Enterprises constantly need funds to meet working capital requirements, expansion, statutory requirements, marketing, or other processes. Approaching traditional channels such as banks or investors is likely to incur a high-interest rate, not to mention time-consuming processes for both parties. Blockchain financing offers solutions, democratizing access to finance.
Enhancing security and reducing fraud in the luxury goods industry
Thanks to blockchain, counterfeiting, and piracy could be a thing of the past. Blockchain enables luxury goods manufacturers to implement tamper-proof record-keeping that tracks ownership and makes it difficult for counterfeiters to alter records. With certificates stored digitally, consumers can authenticate goods directly with the manufacturer to ascertain originality. A secure and transparent process increases consumer confidence and reduces the risk of fraud.
Implementing crypto and blockchain in supply chain
While the benefits of blockchain outweigh the risks, one must carefully assess the situation while implementing a blockchain solution. It would be useful to remember four fundamental parameters before implementing or investing in a crypto project. Let us take a look at each one of them.
Choosing the right blockchain platform for your supply chain needs
Businesses should evaluate the benefits and loopholes in choosing the right blockchain platform. Many blockchain solutions for a supply chain offer services within a module, while the business needs may be diverse. To understand if the platform is the right fit, one must perform a SWOT analysis and see if one can fine-tune technology to overcome shortcomings. From an investment perspective, many overlook scale while selecting a blockchain project.
Building a secure and reliable digital infrastructure
A secure network adds to trust, while reliability ascertains no shortfalls in rendering service. A good blockchain solution assures security and reliability. Needless to say, it should be a fundamental question while evaluating blockchain from an investment or business use standpoint.
Incorporating IoT and other emerging technologies
The Internet of Things (IoT) is a huge opportunity for organizations, brands, and even consumers. We know the benefits of IoT in smartwatches, smartphones, smart-TV, cars, trucks, heating or cooling systems, and machines of all shapes and sizes. The underlying technology within IoT, such as sensors, enables blockchain providers with several benefits and improved efficiencies. Business verticals, such as food, hospitality, manufacturing, and even services, have an essential set of processes and tools that need to be digitized. These tools, if digitized, can significantly improve efficiency.
Addressing regulatory and compliance challenges
Changes in the business landscape accompany significant changes in regulatory and compliance frameworks. Besides ever-changing security protocols and information standards, compliance regulations from state and federal laws, union laws, and other agencies must be actively understood and applied in a business environment. To businesses, non-compliance with such laws could make them obsolete.
The future of crypto and blockchain in supply chain
Crypto and blockchain have a promising future in the supply chain industry, capable of transforming it in myriad ways. Some factors that augment its growth prospects are decentralized supply chain management, increased transparency and traceability, automation of processes, tokenization of supply chain assets, and increased adoption of crypto in the financial world.
Advancements in blockchain technology and their impact on supply chain
Traditional supply chain models cannot track the movement of goods efficiently. While goods can be raw materials, finished goods, or even returns processed by a customer, the lack of visibility hampers both the business and the end-customer. A blockchain-powered supply chain provides a secure and transparent way to track goods and services, thereby improving trust, delivering a good experience, and reducing inefficiencies.
The role of decentralized finance (DeFi) in supply chain finance
DeFi has the potential to play a significant role in the future of supply chain finance. It is a blockchain-based financial system that operates on decentralized networks and eliminates the need for intermediaries, such as banks and financial institutions. DeFi can impact supply chain finance and reduce dependencies.
Impact of crypto and blockchain on global trade and logistics
Blockchain can revolutionize global trade and logistics; improve transparency, efficiency, and security; and enable new processes. Global trade benefits immensely from blockchain features such as transparent ledger systems, automation, decentralized supply chain management, and tokenization of logistics.
The emergence of supply chain-specific crypto and their use cases
Besides developing internal blockchain platforms, many businesses are actively engineering their processes via popular crypto such as Bitcoins, Ethereum, XRP, Stellar, and even Tether. The usage of such crypto variants is becoming popular and is likely to continue given the significant adoption of blockchain technology.
Best practices for implementing crypto and blockchain in supply chain
With nearly 92% of blockchain projects reportedly failing in China, there is a lesson to be learnt. The failure rate emphasizes that while blockchain is crucial, assessment is equally important during the planning stages. Let us look at some strategies to reduce the failure rates.
Developing a clear and actionable strategy
Before implementing or investing in a blockchain project, it is important to conduct a thorough analysis of the supply chain to identify areas that can benefit from blockchain technology.
Choosing the right partners and collaborators
With no dearth of platforms or collaborators, one must evaluate the technical capabilities and business acumen of the partners. It is important to choose the right platform and infrastructure that meets the specific objectives of the supply chain solutions.
Building a skilled and experienced team
A skilled and experienced team lends its credence in executing complex solutions. With blockchain technology revolutionizing daily life, experienced and skilled resources invest time in learning and ensuring that a secure system is built.
Continuously monitoring and adapting to market changes and advancements in technology
Blockchain in the supply chain industry onboards myriad aspects, including computing, data collection, IoT, artificial intelligence, etc. Ultimately, the business impact is a crucial aspect of the process. To achieve economies of scale, it is important to continuously monitor the environment and map changes alongside advancements in technology.
Conclusion
The growth in the crypto market has been dazzling to many investors. Thanks to decentralized ledger-based reporting and investor interest, the crypto market is poised to expand multi-fold. Blockchain, the underlying technology that powers popular crypto, will also see a jump in usage thanks to increasing digitalization and internet adoption.
