Whilst blockchain technology is most frequently associated with cryptocurrencies such as Bitcoin, it has much broader potential and is already helping businesses to change how they work. As a distributed, highly transparent ledger, blockchain could be put to use in supply chain management, helping businesses to fully understand and appraise their distribution network whilst keeping tabs on stock in an easy and often automated way.
Whether a company has an integrated supply chain or not, implementing blockchain-based solutions could bring about significant change in the way we handle products. With greater accountability and traceability, it would be possible not only to save money but also to address ethical concerns and tackle sustainability issues.
As major international companies and innovative start-ups move to adopt blockchain technology, we take a look at how distributed ledgers could be supply chain management’s next big thing.
What’s the issue with supply chains?
With the UK government having now introduced enhanced reporting obligations as part of the Modern Slavery Act 2015, qualifying companies are required to perform detailed reviews of their supply chains and to mitigate the risk of misconduct wherever possible.
In addition to legislative changes, businesses have also started to come to terms with the sustainability and environmentalist movements that have gained popularity amongst a significant cross-section of society. Consumers are perhaps now more than ever interested in ethically sourced products, and so it’s vital for the companies that supply them to be able to accurately trace their goods and evidence their sustainable credentials.
As a multi-party network of resourcing, manufacturing, logistics, shipping and retail, the modern supply chain is a complex trail. Unfortunately this means that tracking produce from source to sale is incredibly difficult and can introduce opportunities for fraud and criminality into the commercial network.
How could blockchain technology help?
With complex, non-integrated supply networks presenting a challenge to businesses of all kinds, blockchain could provide an effective solution for surveillance and end-to-end traceability. Blockchain is effectively a distributed ledger system that records transactions between multiple parties in a permanent and easily-auditable way.
Using a tamper-proof and regularly scrutinised trail, it’s possible for companies to trace their products at every step of the supply chain. A new ‘block’, or record, can be added at each stage throughout the network – enabling management to keep tabs on where their goods are and who is involved in each transaction.
Leading the way with blockchain
It might seem like a substantial and possibly expensive step to take, but it’s hard to ignore the prospect at hand with many of the world’s most respected brands adopting blockchain solutions into their supply chains.
One such company is Maersk – the Danish container shipping giant which has started to apply distributed ledger technology to track the transportation of commodities whilst moving the assignment of contractual risk in a seamless way throughout the process. Using a highly-secure cloud network with RFID codes and an unchangeable record, logistics under this system are clearer and more accountable than ever before.
In a similar way, coffee behemoth Starbucks is reportedly working with Microsoft to develop a blockchain-based supply chain system which will not only track coffee beans from farm to cup but also allow customers to trace the journey of the very coffee that they are sipping away at via a mobile app. Considering that Starbucks works with more than 380,000 coffee farms, proving that they are consistent in their pledge to ethically source raw materials is no mean feat. A robust tracing solution is required, and blockchain looks like a prime candidate to deal with the challenge.
Efficiency beyond the blockchain
Whilst many blockchain enthusiasts will tout the implementation of the technology as a catch-all solution, it’s worth remembering that other infrastructure is required to make supply chains work. Although blockchain systems can be used to track and trace products throughout a network or even execute contracts, they cannot do so without other systems which handle the more practical side of an arrangement.
Payment solutions are an essential part of contracting within the supply chain – even if it is vertically integrated. Suppliers need to be paid on time, and failing to implement an effective system to handle this aspect of business can result in fraught relationships and the loss of goods.
With services like UTP Group’s same day funding and cash advance, businesses could find fluidity in their operations in a way that allows them to continue trading even despite issues elsewhere in the supply network. Whether you need to improve cash flow with almost-instant payments into your business account, or simply to access money quickly and flexibly, choosing an effective merchant services partner could help your business to manage and mitigate problems throughout the supply chain – which you may even be able to spot early via your blockchain ledger.
Looking to the future
All in all, blockchain technology is something that has slowly crept up on businesses, yet it now looks set to take a significant spot in the future of supply chain management. With 60% of Chief Information Officers (CIOs) in major companies intending to integrate blockchain into their corporate ecosystem, it’s hard to imagine anything which could set aside plans to bring distributed ledger technology into the mainstream.
Despite all of this, however, companies and individuals alike should be cautious not to neglect other tech solutions when considering the future of business. With Faster Processing of payments, automation and cloud computing all continuing to make considerable progress throughout the corporate world, it may be best to take a holistic approach to business innovation.