We’ve been hearing a lot about blockchains lately (e.g., bitcoin), including its use in better managing the supply chain. So, what exactly is a blockchain and how can it help your supply chain?
According to Forbes, “Blockchain, essentially a distributed, digital ledger, has many applications and can be used for any exchange, agreements/contracts, tracking and, of course, payment. Since every transaction is recorded on a block and across multiple copies of the ledger that are distributed over many nodes (computers), it is highly transparent. It’s also highly secure since every block links to the one before it and after it. There is not one central authority over the blockchain, and it’s extremely efficient and scalable. Ultimately, blockchain can increase the efficiency and transparency of supply chains and positively impact everything from warehousing to delivery to payment.”
Blockchains work especially well for global supply chains where funds are transferred everywhere.
In general, consulting firm E&Y states that by applying blockchain logic to the supply chain you have the foundation for a “radically new approach to supply chain management [since] no piece of inventory can exist in the same place twice. Move a product from finished goods to in-transit, and that transaction status will be updated for everyone, everywhere, within minutes, with full traceability back to the point of origin.”
In the food and other time-sensitive industries, it’s critical to be able to trace each product to its source. So Walmart, Nestlé and Dole, to name a few, use blockchain to keep track of products that they source globally. This includes having documentation of where items came from, are processed, and are stored as well as a sell-by-date.
Some areas that E&Y see potential applications for blockchain and opportunities for improvements include:
• Procurement: more visibility and more savings.
• Data and analytics: better data, better outcomes.
• Digital contracts and payments.
• Smart contracts to end costly procure-to-pay gaps.
• Putting a stop to the rogues as each participant has a copy of the ledger, and all transactions and movements are part of that ledger.
• Plugging blockchain information into your existing infrastructure.
So it’s no surprise that, according to ComputerWorld, “Blockchain development is now the hottest skill in the freelance job market, growing more than 6,000% since this time last year and putting it on pace to be the new ‘cloud’ of the 21st Century.”
In fact, a recent survey by SAP found that 92% of business leaders view blockchain as an opportunity, with the major application (63%) being supply chain and IoT.
Time will tell if this is an actual trend versus some fad, but it sure makes a lot of sense at first glance.