A supply chain involves different networks of people and businesses that work together from creating a product to distributing it. It starts from the supplier to the end-users or customers. The supply chain industry is so broad that it often results in inefficiencies and transparency. Most supply chain stakeholders have to deal with the challenges of integrating everything together throughout the entire stages of the chain.
The existing systems in place now often make it difficult to remain efficient and consistent. It has a tremendous effect on the profitability of the manufacturers, which in turn affects the final retail price that consumers have to pay.
Benefits of Blockchain for the Supply Chain
Blockchains are initially used as a ledger for distributed systems because of their resistance for modification. This feature of blockchain factors well with supply chain networks. Blockchains have a chain of data blocks, connected through cryptographic techniques. Any stored data using these data blocks cannot be altered unless the whole system is in agreement.
By exploiting this feature of blockchain, supply chains can overcome the challenge of providing a consistent and transparent process.
Top Blockchain Use Cases in Supply Chain
One of the biggest beneficiaries of blockchain in the supply chain industry is the food and beverage sector. By using blockchain, companies can easily trace and track food items. Walmart is the first to adopt blockchain into their systems. The retailer plans to connect their suppliers into the network so they can trace the products using blockchain. The initiative was borne out the increasing numbers of E.coli and Salmonella in most products.
The retail powerhouse aims to strengthen its action parameters in case contaminated food items get distributed into the market by using the track and trace feature of blockchain. The customers can also get a picture of how food travels from the farm to their dinner table. This adoption of blockchain also shows Walmart thrust to provide transparency to its customers.
Instead of throwing out their inventories, retailers can improve inventory checking and shipment of their produce. They can also ensure that consumers will get access to contamination-free food items.
Blockchain technology is crucial in the pharmaceutical industry. Aside from providing advantages for the pharma industry as a whole, blockchain is also useful in the supply chain aspect of drug companies. A significant issue faced by drug manufacturers is the rising number of counterfeit drugs, particularly prescription drugs. For several years, drug companies used several anti-counterfeit measures to help consumers distinguish authentic medications from counterfeit ones. One of the examples of blockchain use cases was introduced by SAP. They launched a blockchain solution that addresses the authentication process. Using a public cloud system, Information Collaboration Hub for Life Sciences, pharma stakeholders can facilitate collaboration where drug manufacturers can verify drug shipments. The system can help organisations comply with different medication supply chain regulations.
Blockchain allows supply chain stakeholders to use smart contracts. Smart contracts are practical tools that help foster secure and straightforward transactions between businesses and suppliers. These contracts function the same way as a physical contract, it is not a real contract. Smart contracts act as a code used to store, verify, and execute activities depending on the set rules. Set rules are those that are agreed upon by the supplier and retailer. These rules include terms of the agreement, that when met, the contract is automatically executed. The execution may mean that the supplier can receive payments and the retailer receives their goods.
Since the smart contract is contained within the blockchain, none of the parties can tamper it. The peer-to-peer (P2P) capability allows peers to communicate directly rather than employing a central intermediary.
Streamlining of Oil Supply
Increasing oil prices affect all industries, so it is a must for government agencies to find ways to control their costs. Once oil prices go down, many of the items for sale in the market will be cheaper. Cheaper products increase consumer spending. Higher consumer spending, in turn, raises a nation’s GDP. An excellent GDP will bring in more investments. When you look at it, it is a chain on its own. One of the essential blockchain use cases in the supply chain is in the oil industry.
The Abu Dhabi National Oil Company (ADNOC) is currently working with IBM, and they have successfully introduced a blockchain supply chain system. The system aims to track oil along its lifespan, beginning from the well to the customers. The tracing system will work to streamline transactions along the way. While the project is still in its infancy stage, ADNOC hopes to eventually welcome consumers and investors into the chain to promote transparency. About 3 million barrels of oil come from ADNOC, and all of these will go into the blockchain technology.
Through blockchain, producers can track oil production and reduce time and shipping costs. When this happens, they can distribute the oil at a much lower price, which will trigger a substantial growth in the market.
Diamond tracking is an essential aspect that must be addressed for humanitarian reasons. Blood diamonds or conflict diamonds must be stopped from entering the market to help prevent the inhumane and violent practice. Since the blood diamonds often come from Africa, profit from the sale of diamonds often used to fund conflicts in the country. De Beers took the leap to prevent further the distribution of blood diamonds into the market through the blockchain technology.
Since the launch of its blockchain program, De Beers successfully tracked and traced about 100 diamonds. The tracking started from the mine, to the cutter, and polisher, and to the jeweller. The progress of the diamond can be seen in the blockchain, together with the information about the diamond’s colour, quality, and source.
While blockchain still has much to improve, it already contributes much to the supply chain industry. These mentioned blockchain use cases in the supply chain are just some of the many benefits of the technology. Blockchain has significantly evolved from being a distributed ledger for cryptocurrencies. It has significant uses that several industries can exploit. Time and again, blockchain has proven itself to be a disruptor.