4 Supply Chain Concerns Blockchain Can Address
- Businesses want improved supply chain visibility to monitor issues such as sustainability and fraud.
- Blockchain can provide a decentralized, synchronized and end-to-end solution to those challenges.
Supply chains are an integral part of any business, but also a part that can cause a number of challenges. From dealing with supplier fraud to concerns over the sustainability of materials and ethical practices of third parties, companies looking for new ways to navigate the complexities of the supply chain are increasingly turning to blockchain.
Blockchain for supply chain management is perhaps the most advanced use case for blockchain. According to a Deloitte survey, 65% of manufacturers looking at supply chains considered blockchain a top-five priority, with 63% saying smart contracts were highly important. With this in mind, here are four ways that blockchain technology is impacting supply chains globally.
1. Building Sustainability into Supply Chains
Supply chains reportedly make up 90% of companies’ environmental impact. Consumers are increasingly asking that the products they choose are produced with sustainable methods. In recent months, it emerged that a fifth of EU soy imports from Brazil could be tainted by illegally deforested land.
To ensure that their supply chains are provably sustainable, organizations are turning to blockchain to track and authenticate the provenance and movement of sustainable products and ingredients. These blockchains (decentralized digital ledgers) store tamper-proof data, allowing companies to prove the sustainable origins of their products and reduce the possibility of fraud.
2. Monitoring Your Products in Transit
One of the issues that companies can face in supply chains is monitoring goods in transit. For instance, when transporting food, companies want to be sure that it is staying at a cool enough temperature.
Companies can pair blockchain with IoT sensors to create an immutable, real-time, provable overview of the state of their goods, including temperature, humidity and condition. IoT sensors collect the data, while the blockchain acts as both an immutable and virtually unhackable digital ledger to store the data — and a secure, decentralized foundation to stabilize and secure the IoT network.
Not only that, but with blockchain technology facilitating collaborative supplier ecosystems, this data can be shared with the suppliers, retailers and logistics companies all at once, giving everyone more accurate visibility of the products and their condition. Using blockchain, problems can be identified earlier, preventing costly recalls and mistakes, which can cost up to $10 million for a food company.
3. Fairly Supplying PPE to Key Workers
The COVID-19 pandemic has highlighted weaknesses in PPE supply chain management. Ensuring that key workers receive PPE is crucial. Governments and healthcare providers can look to blockchain technology to ensure the fair distribution of equipment, with verifiable data providing a transparent view of the entire supply chain. It can also share data securely and immutably across a number of different parties, whether it is agencies or branches of government, without one central party owning the data.
This enables collaboration and easy visibility of data across different entities, which is crucial to an efficient and verifiable supply chain. This can help to distribute PPE fairly to those who need it, and keep track of where PPE is going.
4. Verifying a Product’s Legitimacy
As well as sustainability and origin, consumers also want to know that the product they’re buying is the product they want, particularly when it comes to designer goods and labels. Trade in counterfeit goods makes up 3.3% of global trade, so authenticating products is a big concern for companies and consumers. Companies are integrating blockchain into their supply chains to prove the legitimacy of their luxury products by tracing and recording their production from origin to store to customer.
Lars Rensing is CEO of enterprise blockchain provider Protokol.