Around two centuries ago at the time of its inception, the supply chain was a disruptive idea that would improve control and visibility on products and goods as they move from Point A to Point B. Yet this old concept and technology cannot support today’s production and supply cycles, since it has become quite fragmented, complicated and geographically dispersed.
In effect, the supply chain has become a faulty and opaque process which can be quite hard to manage. The good news is that blockchain is rumored to remedy this problem. The emerging technology has proven its value in bringing in transparency and efficiency to some industries already.
How Can Blockchain Enhance the Supply Chain
Quite a simple application of the blockchain paradigm in the supply chain would be registering the transfer of goods on the ledger as transactions which would identify involved parties, including price, date, location, state of the product, quality and any other data which would be relevant to managing the supply chain.
Its ledger’s public availability is going to make it possible to trace any product to the very origin of the raw material that is used. Its decentralized structure makes it impossible for any one party to hold ownership of the ledger and to make changes to the data for their own advantage. Aside from that, the cryptography-based and immutable nature of transactions makes it impossible for it to be compromised. There are even some experts who believe that the blockchain cannot be hacked.
There are already several efforts that are being made to leverage the power of blockchain in improving supply chain management. IBM rolled out a service which allows its consumers to test blockchains in a secure cloud and keep track of high-value goods through sophisticated supply chains. This service is being used by Everledger, an agency that is using the blockchain to push transparency into the diamond supply chain and to fix a market saturated with forced labor and tied to the funding of violence in Africa.
Aside from transparency, there are also other definite advantages which result from the crossover of the blockchain technology and supply chain.
The Finnish startup Kuovala Innovation has been working on a blockchain solution which enables smart tendering throughout the supply chain. It uses pallets equipped with RFID tags that will publish their need to get from Point A to Point B on the ledger. Its carrier mining application would then place bids to win the move. The job would then be awarded by the RFID to the bidder that has the most suitable conditions, and this transaction will be registered on the blockchain.
What the Future Holds for Blockchain
Nowadays, the blockchain technology has a huge potential to change the supply chain and disrupt the way we market, produce, purchase and consume our goods. This added transparency, security, and traceability in the supply chain can also go a long way towards making our economies a lot of safer and reliable by promoting honesty and trust.