Blockchain: A Catalyst to Profitability in the Supply Chain Industry
The buzz around Blockchain has stabilized for now. We are living in times when actual use cases of Blockchain technology have begun to surface showcasing the true transformative potential of the technology.
Blockchain as a utility shook the financial sector completely with its pioneering invention of bitcoin and cryptocurrencies - a panacea for most financial processes. Blockchain stands as a gatekeeper of trusteeship in sectors including but not limited to healthcare, energy, entertainment, real estate and supply-chain.
Supply-chain experts have begun exploring the utility of Blockchain as a demand-driven public ledger that stores immutable and discrete transaction information for increased profitability. The supply chain of present-day demands added transparency in the operations failing which the profitability of the industry may be adversely affected.
Hence, utilizing blockchain wisely for the supply chain industry will deliver end-to-end visibility, scalability, trust and control over the entire process ecosystem. Blockchain in the supply chain industry has a completely different implication.
“Blockchain is a secure and transparent chain of transaction nodes connecting multiple business stakeholders, for tracing and monitoring the entire process and delivering reliable and informative end-to-end business visibility.”
Unblocking the barriers of Supply chain management
Supply chain industry is already undergoing millions of transactions and the currently running systems are delivering flawed and delayed outcomes. The underlying challenges of this industry - siloed data, disparate data sources, inability to access big data and lack of analytical prowess, are leading the industry to suffer.
Blockchain itself is a self-sovereign process but certain factors in the supply chain blocks users from adopting it such as:
- Replacing or overhauling legacy systems
- Lack of Inhouse Capability
- Sensitivity of Competitive Information
- Inadequate Funding
- Uncertain ROI
- Regulatory and Compliance Concerns
A research survey conducted by Deloitte on ‘How blockchain gets down to the business’ shows why current businesses are reluctant in adopting Blockchain technology.
Moreover, when experts at Cygnet researched this phenomenon, we found additional factors responsible for not adopting Blockchain technology.
- Slow manual process
Small or large, current supply chain systems are inured to handle high volumes of complex data and countless micro processes. Inter dependability of one process on the other results into poor profitability.
- Growing Transaction Cost
High expenditure and maintenance cost in the supply chain warehouse is a result of mismanaged inventory leading you to pay for extra storage space, extra money to search item from the inventory.
- Discontinuity of information
Poorly managed supply chains have been a long chain of mishandled information and its reverberations. This also leads to lack of trust and transparency between the stakeholders reflecting in poor performance of the business.
- Non-synchronized processes
Siloed information and non-connected chains of information from disparate disciplines, departments, vendors and technologies into a single supply chain ecosystem needs an effective synchronization approach.
Blockchain technology has the potential to turbocharge operational efficiencies and upscale businesses to deliver qualitative insights.
Blockchain value addition in supply-chain
Gartner conducted a supply chain technology survey to delve deep into users’ expectations and needs and found that only 19% respondents considered blockchain as a hyperactive technology while only 9% invested in it. The prevalent myths surrounding blockchain technology have been making the supply chain industry reluctant to adopt it.
However, those who have adopted Blockchain Technology have become the biggest advocates of its enormous potential to disrupt industries for the better. Here are well-known real-life use cases featuring some of the biggest names who advocate Blockchain:
- Walmart uses Blockchain technology in USA to trace the fruits sold in their stores while in China they use blockchain to trace selling of pork and meat. This resulted into accurate record-keeping of transactions across multiple stores of such large conglomerates.
- BHP Billiton has been using blockchain technology to effectually manage its vendors, recording movements of wellbore rock and fluid samples and also to secure real-time data generated during production.
- A UK based social enterprise Provenance adopted blockchain technology and increased its annual ROI to $80,000 by developing an application to trace food in Southeast Asian supply chain industry.
It is a tedious job to maintain and track records in the supply chain industry for companies of all sizes and scales, another problem which Blockchain can easily solve. Access to good data develops an interconnectivity between multiple tiers of the supply chain function. A peer-to-peer distributed ledger like Blockchain allows nodes to record transactions and create a shared network transparent to stakeholders.
Some Salient characteristics of Blockchain transforming the Supply Chain Industry
Blockchain as a decentralized system eliminates the third party or intermediary central processes from the overall business cycle. Eliminating the third party from transactions is a rescue from all ambiguity occurring between third party, internal or external agents.
- Audit transparency
Data stored on Blockchain is immutable where changes to data is difficult to impossible. Cryptographic code called hash ID stores every single block of data in a row where manipulation is impossible. In case, changes were made to the data, a new hash is created with time stamps which indicates changes were made to the data at that specific point of time.
Blockchain technology has demonstrated proven skills of veracity and integrity, it does not allow tampering or fiddling with data at source. This guarantees that the authenticity, integrity and credibility of data stays intact increasing the reliability of the system.
- Faster and cheaper transactions
Centralized system are data repositories where the inflow is high and the delivery is slow. Blockchain reduces repetitive tasks and offers a lower transaction fee in exchange for the faster transaction process.
Blockchain offers complete visibility across multiple channels and inventories solving the need of transparent traceability and seamless omnichannel experience throughout the supply chain.
Accuracy and transparency in information sharing is like a lubricant to create a well-oiled supply chain. It is paramount to orchestrate meticulous process planning involving all stakeholders throughout the supply chain. Blockchain technology when wisely implemented across the Supply Chain network promises a hassle-free business progression leading to higher ROI and increased profitability.
Experienced blockchain experts at Cygnet understand the strategic and operational expertise that Blockchain implementation demands. If you are considering Blockchain for business, get in touch with us at firstname.lastname@example.org or call us at +1-609-245-0971.
Drishya Nair is a content writer at Cygnet Infotech. She is a computer engineer turned writer who stumbled onto her love for researching, marketing and branding. She is passionate about lending her voice to providing insights on technology and critical business challenges. When not writing, you will find her at a local restaurant exploring different cuisines or chasing stray cats down the corner.View All Posts