Blockchain: Opening new dynamics in the supply chain

A latest report by the World Economic Forum, dated April 28, 2020 states that ‘Blockchain technology can help tackle supply chain failures exposed by the COVID- 19 Pandemic and also boost the economic recovery process’. In wake of increased pressure on Government and Businesses to maintain resilient supply chains, deployment of Blockchain technology is seen as an important measure.

BLOCKCHAIN TECHNOLOGY – Blockchain technology is considered to be one of the biggest inventions of the 21^stcentury. A blockchain is a public transaction ledger that holds time-stamped series of immutable data in a secure and encrypted way, managed by a cluster of computers and not any single entity. Bitcoin came into being in year 2008 as the first application of blockchain technology. In the last few years, the technology has seen many applications across diverse sectors providing new roadway in the fields of data storage, financial transactions, real estate, operations, supply chain etc

SUPPLY CHAIN & BLOCKCHAIN – The supply chain basically starts with procurement of raw material by manufacturers and eventually ends with delivering the final product to the end consumer, interspersed with many micro and macro processes in the entire chain. Though it seems quite simple, practically maintaining a robust supply chain is a tedious task even for smaller businesses. Various technologies like AI and Machine Learning have been implied to build efficiencies in the supply chain. Out of these, Blockchain promises to revolutionize the entire game.

In the year 2018, when US faced the problem of E. coli outbreak, that impacted about 210 people in 36 states, tracking down the contaminated lettuce proved challenging. In wake of this, Walmart announced that it would be deploying the power of blockchain, to speed up identifying, researching and reacting to food safety situations.

How Blockchain serves as an igniting force in the success of supply chain?

1. Building Efficiency – From conducting the payments and audits to tracking inventory and assets, blockchain technology enables greater supply chain efficiency.

2. Provenance Tracking –In blockchain based supply chain management, tracking the history of product right from its origin, up till its current source becomes easy, due to embedded sensors and RFID tags. This builds transparency and helps in easy detection of frauds.

3. Cold Chain Monitoring –Food and pharmaceutical products often have special storage needs. Embedded sensors on such products can record temperature, humidity, and other environmental conditions. These readings can be stored on a blockchain, and are permanent and tamper proof. If there is any deviation from the specified conditions, each member of the blockchain will see it.  An automated response can be triggered to take corrective action.

4. Operational Benefits –Deployment of blockchain technology can also offer various operational benefits in supply chain management as

• Recording for security: The quantity of assets like pallets, trailers, containers, etc. between supply chain nodes are shared via indelible ledger, which eliminates the need of audits by internal systems and processes.
• Modular Tracking:  Trade-related documents of order, purchase, receipts and shipment notification are virtually accessible by any number of participants and any number of touch points.
• Enhanced verification: Certificates or properties of physical product can be seen by end consumer to know about their credibility. From raw materials and manufacturing to transportation and delivery, consumers get a broader accessibility.
• Linkage: Physical products are linked to the RFID tags, barcodes and serial numbers for digitalized communication.
• Information sharing and transparency: Transparency is ensured by complete documentation of product’s journey across supply chain in transportation routes, manufacturing process, assembly and delivery of products between vendors and suppliers etc.

5. Data integration across stakeholders – Blockchain helps in tackling the most important challenge of data integration across stakeholders. Tracking within an enterprise function is easy, but when a product travels through multiple stakeholders, each deploying different technologies, tracking the product until the last mile becomes difficult. This can be successfully resolved through the deployment of blockchain technology.

The post is contributed by our guest blogger Vinay Verma. Vinay works for a leading MNC and has 13+years of experience in the IT industry and has a passion for photography, travel and music.