Supply chain is one of the most complicated fields that drive the global economy. Typically, a supply chain involves thousands of stages, multiple geographical (international) locations, a multitude of invoices and payments, several individuals and entities, and millions transaction and exchanging of products and services time over time.
The current supply chain is becoming more and more complex. A long time ago, supply chains were relatively simple because international commerce was very small compared to local commerce, but they have grown incredibly complex. When the international economy grew significantly with the revolution of the manufacturing and transportation industries to adapt to the globalization of the world economy. The role of the supply chain is crucial. Thanks to supply chain, a consumer in Vietnam can buy beef imported from the USA, cherries from Australia, fish from Japan for their daily meal. Consumers now can buy almost everything easily, but it’s incredibly difficult for them to know the value and safety of products because of the lack of transparency in our current supply chain. Also, it’s challenging to investigate when there is suspicion of illegal or unethical actions. Market information is hard to get for businesses, and companies don’t have a trustful information source for planning and forecasting consumers’ needs due to inefficient information flow.
Inefficient information flow hinders consumers from getting information relating to products such as product journey, origin, using instruction, which leads to the buying decision and trust of consumers. Businesses also get troubles of transparency and trust due to inefficient data flow. Businesses don’t have end-to-end visibility through the supply chain; therefore, they have to incur more costs, time, and losses because they can not track the status of the product constantly and make right decision when there is an issue occurs.
How could it help supply chains
Blockchain technology is the key pillar of the Industrial revolution 4.0. Many say Blockchain is a game-changer, just like the internet, and it will make a significant impact on every aspect of our lives.
Blockchain records transactions between parties permanently and securely. Every transaction is recorded on a block and across multiple copies of the ledger in a network of thousand nodes of Blockchain; therefore, information from Blockchain is highly transparent. When information is blocked in a block, it cannot be deleted or changed. Moreover, there is no central authority in the Blockchain, it’s efficient and scalable; thereby, increasing the efficiency and transparency of supply chains and positively impact overall activities from manufacturing, distributing to selling and marketing to payment.
As an expert research of Capegini, 89% of experts agree that Blockchain can help businesses save operating costs. 81% of them agree on enhancing traceability, and 79% agree that Blockchain can enhance transparency. On the other hand, 57% experts believe that Blockchain can increase more revenues while reducing risks as 50% expert predicted.
In the supply chain, transparency is essential. Transparency gains trust from all stakeholders and can help save costs, time, and prevent risks. However, the supply chain is naturally complex, and information is not always fully available to everyone, causing lack of transparency. According to a research of Deloitte shows one of the biggest problems in the supply chain is transparency, 65% surveyees who are top procurement leaders agree that they have no visibility (or limited visibility) beyond their Tier 1 suppliers.
Blockchain allows all stakeholders to track variations or deviations on the chain of supervision; thus, enhance transparency in the supply chain. Everybody can track the chain of ownership for a product recorded on Blockchain. Moreover, recorded information cannot get erased, which is essential for a transparent supply chain. The tracking data is accessible and easy to retrieve from a trustful source without any risk.
Reduce Transaction Costs
Processing and administration costs account for about 20% risen in transportation’s overall costs, due to over-reliance on paper transactions. For instance, a company has to wait 42 days before receiving payment of an invoice. There are 140 billion tied up in disputes for transportation payment every day.
Blockchain can reduce the costs and time for transaction significantly. With Blockchain, a transaction can be processed fast and secure in just some minutes regardless it is a domestic or international transaction. Blockchain is estimated to help companies save $50 billion a year when it is widely adopted and can be up to more than $500 billion a year.
Blockchain allows enterprises to eliminate inefficiencies and improve productivity by computerizing the entire business processes through the use of smart contracts. With Blockchain, organizations can have up-to-date, secure, and reliable data to make decisions across the supply chains. Digitalizing business processes also reduces human mistakes and risks relating to manual work.
Blockchain also makes customs clearance procedures more efficient by lessening processing times for goods at customs checkpoints and provides trustworthy information about products for document checking and product inspections. Blockchain can be integrated into the organization system as a source of providing trustful information.
Auditability and Traceability
Blockchain provides a single platform for recording and storing information. It allows all information in the supply chain to be tracked and retrieved when needed. Therefore, customers, enterprises, suppliers, and transporters can trace the history of products to make right decisions in buying, planning, and solving problems if it occurs.
Traceability also helps auditing easier and faster. Traceability information stored on Blockchain is immutable and unmodifiable. It makes data transparent and trustworthy, thereby making the auditing process more efficient and cost-effective. Independent auditors, including product certification issuers can audit and verify the product quality based on the data retrieved from Blockchain.
Security is the top concern of organizations in applying technology into business processes. Blockchain is very secure and scalable as there is no central authority over the whole system. Changing information stored in the chain is impossible. Blockchain is open and transparent because there is no central server or control point. Then, the security level of Blockchain is higher as compared to other solutions. Blockchain also uses advanced encryption techniques to ensure the protection together with other features such as distributed ledgers and smart contracts. Theft, premium fees, ransomware, corruption, and tracking related problems can be solved by using different blockchain features.
Getting a large number of supply chain stakeholders to agree on a shared set of data is very difficult. The only way to make this happen is using an impartial intermediary who could process and reconcile all transactions. Thanks to Blockchain, each organization can verify the calculations and work while removing extensive amounts of cross-checking and redundancy. The transparency characteristics of Blockchain enhances trust throughout the supply chain.
Increased Customer Satisfaction
Current consumers are increasingly interested in the journey of products such as where it comes from, the origin of products. They’re willing to pay more for eco-friendly products and want to know as much as possible about a product before making a decision. Blockchain offers an opportunity to engage these consumers.
Blockchain traceability increases customer satisfaction. It provides transparent, adequate tracking information to consumers. Consumers can access the data eaThe traceability data is accessible easily by any smartphone. Therefore, consumers are satisfied with the company products or services who can offer blockchain traceability.
Improved Data and Analytics
Managing inventory, warehousing, and transportation activities are very difficult and complicated. Businesses need a solid data source that they can trust and analyze. The more accurate and sufficient data they have, the more optimal operations they can deliver.
Blockchain helps improve data and analytics, leading to better outcomes. It allows businesses to track and manage their resources in every step with greater accuracy and up-to-date data. This will create better forecasts, better warehousing, and transport plans, and less inventory being stocked unnecessarily.
With many significant benefits that Blockchain brings to the supply chain, businesses should seriously consider applying this technology into their supply chain to gain competitive advantages. Investing in new technology is costly, time-consuming, and yet, not easy. Therefore, businesses can find alternative solutions besides developing blockchain applications in supply chain themselves. Currently, there are many organizations developing blockchain-based solutions for managing the supply chains and providing them to enterprises as a service. Businesses can approach Blockchain in this way. It would be better than doing everything on their own while they can use blockchain services.
WOWTRACE is a completed ABCD (AI, Blockchain, Cloud, Data) Traceability Solution that brings sustainable growth and transparency to the supply chain across Asian countries. Thereby, all stakeholders achieve end-to-end visibility and control over their operations on the supply chain.
Learn more about WOWTRACE at: https://www.wowtrace.io/
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