How is Blockchain ushering a revolution in the supply chain industry

The Blockchain is the technology that powers the cryptocurrencies such as Bitcoin, Ethereum, etc. However, the true power of blockchain lies in the fact that it is an open, yet powerful ledger. As per Investopedia, the blockchain is a distributed database that holds records of digital data or events in a way that makes them tamper-resistant. While many users may access, inspect, or add to the data, they can’t change or delete it. The original information stays put, leaving a permanent and public information trail, or chain, of transactions.

Distributed databases are not new in the supply chain industry, but the blockchain has the potential to record, track, and verify trades of virtually anything that holds value. It does so in a fashion that is secure and transparent too.

The supply chain system has multiple levels where a product is handed over to someone else. We could utilise the blockchain to document this transaction. This would create a permanent history of the product from the point of manufacture, all the way up to the point where it reaches the end user. The blockchain in essence, has the potential to become the core system which powers the supply chain.

Here are the few key sectors which could benefit immensely from the use of blockchain:

1. Recording asset transfers: A supply chain blockchain could be used to record the balances and transfers of inventory across a distributed supply chain network. This would mean that the movement of a certain product across all nodes is documented on the network

2. Tracking a moving asset: Key data such as purchase orders, shipment receipts, or any other documents corresponding the product could be stored as data on a node. This would ensure accurate real-time tracking of products that are being moved

3. Integration with warehouse management systems: A blockchain can be incorporated into an inventory management system. This can help prevent supply of fraudulent items, while at the same time assuming automation of inventory control. This would also help streamline the distribution process to a larger extent.

4. Linking all the pieces together: there exists a large amount of fragmentation in the way that many products are identified at every level. The use of blockchain here helps link all the parameters that identify the product into a single unit. This helps making the task of tracking a product much easier.

5. Information sharing becomes easier: When we use the blockchain for supply chain management, it makes sharing information about products with suppliers and vendors easier.

Ever since the news about the terrible working conditions in various manufacturing facilities of major companies has broken, there has been a growing call from customers and governments demanding more transparency from brands, manufacturers, and producers throughout the supply chain. In the United Kingdom alone (http://onlinelibrary.wiley.com/doi/10.1002/sd.394/abstract) , over 30% of online shoppers have expressed concerns about issues relating the origin of the products they are purchasing. When it comes to the supply chain industry, there is a competitive advantage in having an open, transparent supply chain and having sustainable manufacturing facilities.

However, there is a key issue with the current model used in the supply chain industry. A centralised system cannot power transparency. There have been many organisations that have been formed with a key role in mind: protect the interests of the workers in manufacturing. However, we cannot trust a single organisation to protect the interests of these people. The idea of using a centralized system with a governing third party was, until recently, the only conceivable way to achieve data and transaction transparency along supply chains. However, the use of blockchain in place of these systems will power transparency and will protect the interests of everyone in the chain equally.

The usage of blockchain represents a paradigm shift for the supply chain industry. This technology will ensure:

1. Enhanced transparency: of documentation of a products journey through the supply chain

2. Greater scalability: the blockchain is proven to be scalable, which mean there can be an infinite number of participants

3. Greater security: An indelible ledger which is shared helps eliminate the process of auditing which is required by internal systems and processes

4. Room for innovation: The blockchain is just a stepping stone in the process of revolutionising the supply chain system

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