How can blockchain revolutionize supply chain management?

Blockchain technology has gained immense popularity in the past decade. While initially, it was limited to the world of cryptocurrency, it has now found multiple applications across industries due to its unique selling point – a secure, decentralized and transparent ledger system. One such industry where blockchain has promising applications is supply chain management. Supply chain comprises of multiple stakeholders such as suppliers, manufacturers, distributors, customers, etc. Every stage of the supply chain involves multiple transactions that are often error-prone, time-consuming and lack transparency. Blockchain, with its unique features, can revolutionize supply chain management by improving transparency, reducing inefficiencies and ensuring timely deliveries.

Challenges in the current supply chain management system:

The current supply chain management system suffers from inefficiencies at every stage. Some of the significant challenges faced by the industry include-

1. Lack of transparency- The current supply chain management system lacks transparency, making it challenging for the stakeholders to track the movement of goods from one stage of the supply chain to another.
2. Delayed payments- The supply chain system often involves multiple stages of transactions that make the payment process cumbersome and time-consuming.
3. Inefficient management- Supply chain management often involves manual processes that lead to errors and delays, affecting the business’s overall efficiency.

Applications of blockchain in supply chain management:

1. Transparency- One of the significant advantages of blockchain technology is transparency. The blockchain system creates a secure and transparent ledger that can be accessed by all stakeholders involved in the supply chain. This feature ensures that everyone involved in the process can track the movement of goods at every stage of the supply chain, reducing the chances of miscommunication and errors.
2. Decentralized system- The blockchain system is decentralized and distributed, making it resistant to tampering, fraud, and hacking. This feature makes it an ideal choice for supply chain management, as it enhances the trust between the stakeholders involved in the process. This feature ensures that every transaction is recorded on the ledger system, and once recorded, it cannot be changed, ensuring complete transparency.
3. Smart contracts- Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller directly being written into lines of code. With smart contracts, supply chain stakeholders can automate processes, such as payment settlements, and reduce the chances of delays and disputes. They function exactly as programmed, which ensures that all parties’ commitments are met before the payment is processed.
4. Reduced time and costs- Blockchain technology can cut cost and time significantly, and this makes it ideal for supply chain management. It eliminates intermediaries in the supply chain management system and reduces the chances of errors, increasing efficiency in the process.

How blockchain can revolutionize supply chain management:

1. Improved traceability- Blockchain can enhance traceability in supply chain management immensely. With blockchain technology, it is possible to trace the origin of goods and products at every stage of the supply chain. Every time a product is transferred or processed, it is recorded on the blockchain ledger, making it easy to track its movement. This feature can prove to be extremely useful, especially in the food industry, where the origin of food items is critical.
2. Improved quality control- The blockchain ledger records every transaction, which makes it easy to track the quality of the products. With blockchain technology in place, businesses can quickly identify the suppliers of the defective goods and trace the source of the problem, ensuring quality control.
3. Increased efficiency- Blockchain technology can help reduce inefficiencies in the supply chain management system. With the implementation of blockchain, there is no need for intermediaries, which cuts the costs and increases efficiency. Manual processes can also be automated, reducing the chances of errors and delays, improving overall efficiency in the system.
4. Improved collaboration- Collaboration is essential in supply chain management. With the blockchain system, stakeholders can collaborate effectively. The blockchain system ensures that everyone involved in the process has access to the same information, eliminating the chances of miscommunication and delays. Every transaction is recorded on the ledger, ensuring transparency in the process and increasing trust between stakeholders.

Case study of Walmart using blockchain in supply chain management:

Walmart has been one of the early adopters of blockchain technology in supply chain management. The retail giant has been using blockchain to track the movement of produce from its origin to the store. Walmart partnered with IBM to create a blockchain system that enables the suppliers and retailers to track produce from the farm to the store.

The system records information such as origin, date of harvest, amount and quantity of food items, etc. This information is stored on the blockchain ledger, which ensures complete transparency in the system. This system enables the retailers to quickly identify the source of any problems, facilitating quick recalls and minimizing food wastage.

Conclusion:

Blockchain technology has enormous potential in transforming the supply chain management system. Its unique features, such as transparency, decentralization, smart contracts, etc. can address the current challenges faced by the industry. Blockchain can enhance traceability, quality control, and efficiency in supply chain management, increasing transparency and trust between stakeholders. While blockchain is still in its early stages, it is no doubt that it promises to revolutionize the industry, making supply chain management more efficient and transparent.