Blockchain In Supply Chain Management
Last Updated: 1st November 2018
There has been a lot of talk for what blockchain technology can do for our society. This talk has usually centered on the blockchain’s ability to “bank the unbanked”, or disintermediate the middle man in situations such as cross-border payments. To add to this list of potential use-cases, another interesting application of blockchain technology is in the field of supply chain management.
For those that do not know, a supply chain is simply a network that is established between a business and its suppliers. This network is used to facilitate the production and distribution of a product or service from the supplier to the consumer. This process involves transforming natural resources and raw materials into a finished product or service that a customer can consume. For example, the supply chain process of a t-shirt will usually involve making using of raw materials such as cotton and natural dyes to produce a wearable t-shirt.
The supply chain plays a vital role in driving global and national economies, by facilitating commerce. However, there are a number of problems associated with a conventional supply chain. Supply chains can cover numerous stages and across multiple geographical locations, which can make it difficult to identify any issues that may arise in the chain. Moreover, it is also extremely difficult to verify the authenticity of products as they move along their supply chains. This can mean that consumers end up with counterfeited products. However, blockchain technology appears to be a very viable solution with which to solve these problems.
The manner with which blockchain can be leveraged to tackle supply chain inefficiencies is primarily through the use of asset digitization. With this method, a product’s supply chain can effectively be digitally represented onto an immutable blockchain. Asset digitization allows for products to be tagged, and assigned with unique identities that are then transmitted onto the blockchain. Important product information such as: the date, location, and state of product can all be translated and tracked on the blockchain. The advantage of this is to bring greater clarity to a product’s supply chain, if an incident does occur, the stage at which the issue arose can easily be identified, with it being much easier for a business to take necessary steps to make sure that similar problems do not arise again in the future. Another advantage to digital asset tracking with the blockchain is to give consumers greater oversight over a product’s supply chain. With the use of blockchain, consumers can verify that their purchased good is not a counterfeit, because they would be able to track a purchased good at each stage of its supply chain.
Waltonchain and VeChain are two projects that are seeking to leverage blockchain technology to solve supply chain issues. Both projects make use of digital asset tracking technology to enable this, with Waltonchain utilizing its Radio-frequency Identification (RFID) technology, and Vechain employing its VeChain Identity (VID) technology. The purpose of both technologies is to mark a product, so that it can be digitally represented onto their respective blockchains (Find out more about Waltonchain and Vechain). Both projects are still relatively in their early stages, however, it will be interesting to see how both ventures shape the future of supply chain management.
In conclusion, blockchain technology presents itself as an extremely viable solution to the problems that are often encountered in supply chain management. The immutability and transparent nature of blockchain makes it an ideal candidate for bringing clarity to an often obfuscated process, and also deterring counterfeit goods by providing greater consumer oversight.