Supply chain is now more daunting task than before. Gone are the days when this sector was relatively simple because business was local. But with the passage of time, advent of internet and globalization made this sector incredibly complex. Depending on the products, the entire process can be long due to hundreds of stages, multiple geographical locations, too many invoices and payments, and several individuals and entities involved. As so many entities are involve in the sector so transparency and accountability always comes as a question mark. In this scenario, to ensure transparency and accountability in the supply chain, Blockchain can be the perfect solution. This revolutionary distributed ledger has immense potential to change the landscape of supply chain sector. In this article, we will discuss how Blockchain technology can transform the supply chain, and what the market size is of the Blockchain technology in the supply chain. But before this we will discuss the existing problems in the supply chain.
Lack of transparency:
Lack of transparency is the one of the main problems in the present supply chain management. Due to the globalization, now supply chain is incredibly complex. Here enterprises and customers both have not clear visibility of all the person in the management. Whenever a product is ordered by the customers then it reach to them from several middle man and different geographical location and it is very difficult to track of every channel that the product passes through. Due to lack of visibility companies have no idea about the middle man during this entire process, resultant expense rises for the enterprises, which in turn hamper customer satisfaction.
Long lead time:
Time between initiation and execution of production process is known as lead time in the supply chain. Especially globalized enterprises, face problem of longer lead time because their supply chain network spread across all over the globe. So as the demand of the product arises then enterprises unable to fulfill the demand, as a result they are failed to manage their business efficiently.
To send any product over various geographies, the supply chain, suffers severe uncertainties due to political and economic instability of that region. Besides, company managing the suppliers in the multiple countries has to consider the factors like weather, connectivity etc. to manage the supply chain efficiently without hampering the business.
Due to the lack of transparency, security in the supply chain network is the biggest problem. In the present system companies have not clear visibility about the management system like who is handling what and how the particular order getting executed? In this scenario that product may be subject to several risks like theft and piracy. Besides, if the company is getting technical support from substandard IT management system then the entire supply chain network may be subject to hacking.
How Blockchain technology can change the Supply chain?
Blockchain is a distributed ledger that works on the principle of cryptography, a complicated mathematical algorithm that records the information in such a way that people on that network can view that information but can’t alter it, once it is recorded in the system. It is a decentralized network that works without a single central authority. This revolutionary distributed ledger has immense potential to eliminate the third party from the supply chain network, manage the huge amount of data of the supply chain and ensure transparency, security, and accountability in the entire supply chain network. Following are the some key features of Blockchain that can prove highly effective in the supply chain system.
The decentralized property of the Blockchain can prove highly effective to ensure transparency in the supply chain. Due to the decentralized property, recorded information will be shared and saved in thousands of nodes or computers, and all the information are verified by users on the network so there is no place for wrong information. For instance, enterprise can record location, price, date and other relevant information of items in the supply chain and this information will be shared and saved in thousands of computers on the network.
This is a striking feature of the Blockchain that will prove highly effective to prevent theft and fraud in the supply chain. The recorded information on the Blockchain is immutable, simply put once the information is recorded in the system, then no one can alter it. In case of supply chain, authentic and verified data ensure stakeholders to maintain trust among partners.
Smart contract is a feature of the Blockchain that allows two parties to enter into a contract and have the terms in the contract execute automatically once an event is triggered. Smart Contract is a piece of code that is encoded into a block and distributed across the network. In supply chain Smart Contract will prove highly effective and can manage all the financial transaction among multiple parties instantly and easily.
The potential benefits of using Blockchain in the supply chain:
- Adopting Blockchain technology in the supply chain will enhance transparency and accuracy in the system. This technology will enable users to track their order at any given time.
- Smart Contract will enable companies to automate their purchasing process that will reduce the cost, save time, improve transaction flow, and security in the supply chain network.
- Blockchain will enable sellers to access their data easily. With this technology, seller can store all data of the product like origin of the product, the cost of the product, product certificate and records etc. on a single ledger. Such system not only ensures transparency in the system but also reduce the chance of any manipulation.
- Due to the immutable character of the Blockchain, data will remain secure on the system. No one can alter the information, once it is recorded in the system. Blockchain will store supply chain’s sensitive information in a better manner than in any other system and that will safe from tampering or hack.
- Implementing Blockchain technology to the payment system will reduce the friction in the payment and eliminate the trade dispute.
The market size of the Blockchain technology in the supply chain:
According to the research and statistics by a reputed marketing research organization, the present Blockchain supply chain market is of $ 145 million and by 2023 and the market will surpass the staggering figure of $ 3,314.6 million. Now the following companies are using Blockchain in their supply chain network.
- The retail giant Wallmart using Blockchain technology to track their product.
- Unilever, Nestle, Tyson, and Dole using the Blockchain technology for similar purposes.
- The world’s largest mining firm BHP Billiton using Blockchain technology to track and record the data throughout the mining process with its vendors.
- World’s leading Diamond company De Beers using Blockchain technology to track stones from the point where they are mined and up to the point when they are sold to customers.
Literally, Supply chain is a massive sector and you can’t expect any revolutionary change in the existing system in overnight. Here, positive thing is that the world’s leading brands are understanding the potential of this revolutionary distributed ledger and implementing it in their organization. The market of the Blockchain in the supply chain is increasing exponentially and in future this technology will change the landscape of entire system and ensure smarter, faster, and more secure supply chain from one end to other.