2 Jul 2022| Artificial Intelligence
Blockchain for Supply Chain Transparency and Traceability
A blockchain is a distributed, or decentralized, ledger—a digital platform for securely storing transactions between several participants. It is also possible to configure the ledger itself to initiate transactions automatically. The primary use of blockchain in cryptocurrency networks intended to replace fiat currencies is to allow an infinite number of anonymous participants to conduct private, secure transactions with one another without the need for a primal middleman. Through the use of decentralization and cryptographic hashing, blockchain, also known as Distributed Ledger Technology (DLT), ensures that any digital asset’s history is unchangeable and transparent.
When it comes to the supply chain industry, new technologies provide flourishing possibilities for development. By implementing blockchain in the supply chain, transparency and traceability will undoubtedly be increased, and administrative expenses will be minimized. Blockchain-based supply chain solutions assist businesses in using data to manage current disruptions and safeguard the future.
The first blockchain application, Bitcoin, spurred considerable blockchain testing, notably in the financial services industry. In order to pilot and test blockchain technology for share trading in the Nasdaq Private Market, Nasdaq and OMX Group Inc. teamed up with the blockchain startup- Chain in 2015. Most of the UK’s high street banks, including Visa Europe, The Commonwealth Bank of Australia, RBS, and others, have said that they are developing their own proof-of-concepts using blockchain.
As it is evident that the digital record-keeping system known as blockchain, which powers Bitcoin and other cryptocurrency networks, has the potential to revolutionise the entire financial sector. But supply chain management is another area where it shows enormous potential. Blockchain may significantly enhance supply chains by facilitating quicker and more cost-effective product delivery, strengthening product traceability, enhancing partner coordination, and facilitating access to funding.
Large organisations and startups are looking for ways to use blockchain outside of the financial services sector as the technology becomes more well-known. Blockchain solutions are already being tested by several companies to meet a variety of purposes. A six-month test for using blockchain to track ethical tuna procurement in Indonesia was just finished by Provenance, a startup that focuses on supply chain transparency.
With the use of blockchain technology, the 2014-founded business Monegraph is able to share the money among media producers, publishers, and distributors while protecting the usage and sharing rights of digital material like video snippets or brand-sponsored content. The $18 trillion global trade finance industry, which encompasses a variety of parties including buyers, sellers, logistics providers, banks, customs, and third parties, is the target market for Skuchain’s blockchain-based B2B trade and supply chain financing solutions.
By boosting supply chain transparency, lowering risk, increasing efficiency, and improving overall supply chain management, blockchain-driven supply chain innovations have the potential to produce enormous economic value.
A decentralized, immutable record of all transactions and the digitization of physical assets by organizations allow for more transparent and precise end-to-end tracking of the supply chain, allowing for the tracking of assets from manufacture to distribution or end-user usage. Businesses and consumers may see more information because of improved transparency in the supply chain.
Blockchain can assist companies in keeping track of pricing, date, location, quality, certification, and other pertinent information to manage the supply chain more efficiently. The availability of this data within the blockchain can improve visibility and compliance over outsourced contract manufacturing, lower losses from grey market and counterfeit products, increase the traceability of material transportation, and possibly strengthen an organization’s position in ethical manufacturing.
Increased supply chain transparency, as well as decreased cost and risk, will be attained through blockchain. In particular, blockchain supply chain improvements can provide the following major advantages:
For high-value items like diamonds and pharmaceuticals, blockchain can promote enhanced supply chain transparency to help decrease fraud. By lowering or extinguishing the impact of counterfeit items, blockchain might help businesses better understand how ingredients and end products are transported via each subcontractor, as well as minimize/eliminate profit losses from grey market and counterfeit acts to boost consumer confidence.
To summarize, blockchain can simplify administrative procedures and lower expenses by providing an efficient audit of supply chain data. A distributed ledger containing all pertinent information might speed up processes involving human checks for compliance or credit that may take weeks.
As the technology gains traction, companies should continue to track their competitors who have started experimenting with blockchain. Blockchain notably benefits from the network effect; once a critical mass emerges in a supply chain, it is simpler for new participants to join and reap the benefits. Companies might observe rivals and other supply chain players for clues on when to create a blockchain prototype.
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