The applications of Blockchain technology are revolutionizing the enterprise technology space, and today go far beyond just series solutions for any one sector.
With the advent of Industry 4.0, global supply chain structures have transformed from the core. Building resilient supply chains is necessary for enterprises to ensure business continuity during any disruption. Industry veterans are exploring Blockchain opportunities in their enterprise IT tech stack. Blockchain enables businesses to create a single source of un-editable information and self-executing contracts to enhance transparency, accountability, and efficiency of existing supply chains.
“From a supply chain perspective, Blockchain offers clear benefits, especially in terms of tracking a supply chain from its source through to its end customer delivery. The technology provides visibility into where goods are coming from, where they currently are, and where they’re going,” says Omer Abdullah, co-founder and managing director of The Smart Cube
A recent report by Markets and Markets titled “Blockchain Supply Chain Market” predicts that the global Blockchain supply chain market size can grow up to USD 37,272 Million by 2026. The research suggests the market size would grow at a Compound Annual Growth Rate (CAGR) of 53.2% during the forecast period from 2020-2026.
Enterprises today are plagued by a lack of supply chain visibility, availability, and trust. CIOs should consider integrating Blockchain in their IT infrastructure to share trusted data through reliable Blockchain solutions. It is one of the most efficient approaches to building resiliency during disruptions. Because enterprises and consumers need brands to ensure authentic product quality while, supply chain partners want responsible procurement and increased transparency to reduce disputes. Organizations that integrate Blockchain in their enterprise tech stack can assist the supply chain leader in using data efficiently to overcome current distribution challenges and ingrain resiliency for the future.
“For example, Walmart, the leading US-based retailer, has integrated Blockchain into its supply chain for the food category, so it can track every touchpoint a product goes through before it arrives in customers’ homes. The implementation of Blockchain has enabled the retailer to trace the source in real-time. Before, this could take close to a week, even if all the data was captured,” adds Abdullah.
Applications of Blockchain to build resilient supply chains
Here are a few Blockchain applications that businesses can embrace to overcome the challenges of the existing enterprise tech stack:
Enterprises can integrate Blockchain in their supply chain to protect their consumers from fraud and stolen or harmful products. CIOs should consider adopting Blockchain to track the entire product journey right from procurement to the end clients. It is a perfect way to minimize the need to share data because there is no need to share purchase orders, bills, and payments on the same Blockchain. Moreover, this technology will enable businesses to easily spot all the supply chain vendors and shipment batches of a faulty product for effective recalling. Organizations can find the exact fault in the production, which resulted in faulty manufacturing to minimize waste. Enterprises struggling with counterfeit products in the market can integrate Blockchain to increase the authenticity of their products.
Developing supply chain resiliency
An intricate supply chain that has multiple components, including vendors, clients, and locations, is difficult to manage. Implementation of Blockchain into the IT infrastructure will help to overcome the challenge of excessive inventory and stock outs. Businesses need to unify their data from production and inventory allocation in a central repository to streamline the data flow.
“While Blockchain looks like it is here to stay, it needs to evolve a little bit further before it can be practically implemented by procurement and supply chain teams,” Abdullah adds.
Traditional processes need a seamless integration between the tech stack to store, manage, and process data from various sources. CIOs should consider sharing the inventory flows on a Blockchain to give freedom to each unit to make strategic decisions based on a distributed ledger. Blockchain technology enables businesses to treat finished products, process capacity, production inventory, and raw materials like a digital currency that can be traced from the source. Centralizing the entire supply chain on Blockchain will help businesses to streamline logistic data, track shipments, and automate payment without the need for tech stack upgrades.
CIOs should consider centralizing inventory, data, and financial flows through a Blockchain to simplify financing, contracting, and establishing a cross-border business. Organizations can leverage Blockchain to streamline accounts payable by reconciling purchase orders, tracking the terms and payments, and executing approvals at each step. The retail and finance industries are embracing Blockchain technology to ensure efficient supply chain management.
Developing a customized Blockchain
Integrating Blockchain into the enterprise tech stack will require businesses to customize the algorithm to suffice supply chain demands. Because supply chain demands differ from the financial or crypto aspect of it. CIOs should consider evaluating their end-to-end supply chain to determine the processes that can be simplified with Blockchain technology. Efficient supply chain management requires sharing private Blockchain with known users instead of anonymous partners. It is a perfect way to track product flow at every stage to increase accountability in the production flows. Enterprises need to ensure they provide access to the Blockchain based on the job role because an open and decentralized structure imposes a risk of data privacy.
Industry 4.0 generates a huge volume of data with valuable business insights which can be misused by competitors to gain a competitive advantage. Hence, enterprises need to be vigilant while providing access to the Blockchain participants.
Building a group of trusted partners to distribute the data on a shared ledger is a challenging part for businesses. Organizations need to establish a governance structure to understand the rules of the Blockchain, who can be invited to the network, what information is shared, and encrypted, and the scope of IoT and smart contracts in the business work processes. CIOs should consider designing a stringent protocol to restrict the type of data stored on the Blockchain to minimize data privacy risk and make relevant information available to all supply chain partners.
Industry 4.0 demands enterprises to have resilient supply chains to ensure business continuity even during disruptions. Integrating Blockchain technology into the supply chain tech stack will help enterprises to increase transparency, visibility, and accountability.