“Blockchain for supply chain” isn’t just a fun rhyme — it’s an incredibly powerful tool with immensely high pay-offs. For years, organizations across the manufacturing and distribution industries have sought ways to increase transparency. After all, the supply chain is an infinitely complex and interconnected — yet often disparate — network that relies on Company A to complete processes before Company B can complete theirs.
So, how does blockchain fit into the picture? What is it, and how is it applied to logistics? And, perhaps most importantly, is utilizing it right for your business? Let’s find out.
Introducing blockchain
Most people know about blockchain only in relation to cryptocurrency, but according to Supply Chain Digital, it has multiple applications in commerce. For the uninitiated, it’s a shared database that’s created from information various organizations feed to it. It’s decentralized and can’t be altered or tampered with, making it a reliable and secure resource. As Coin Telegraph explains, when someone puts data into this digital ecosystem, its ledger stores information about that transaction. This is what creates traceability and end-to-end transparency.
Why blockchain works in logistics
As previously mentioned, the supply chain is a complicated series of interwoven operations, and communication between organizations remains a primary challenge. So, blockchain technology is perfectly suited for lending these companies the high degree of visibility they need to carry out and improve business operations.
As e-commerce drives manufacturing and distribution demand, time and accuracy are of the essence. Blockchain facilitates fast, efficient and precise communication, all of which are crucial for beating out the competition. Anyone authorized can look at the pool of information and get the data they need to inform their next steps — no emails, phone calls, instant messages or site visits required.
This makes ascertaining details about production stages, shipment locations and estimated delivery times much easier. Additionally, information gathered in the blockchain helps companies perform quality control as they can view ownership and certification records to determine where and when something went wrong, such as delayed delivery or damaged goods, to figure out who’s liable for any costs.
Blockchain also largely eliminates the need for a physical paper trail, saving companies hundreds of hours in manual invoicing, accounting, auditing and reporting. The technology also allows workflows to be digitized, which further reduces taxing manual administrative labor.
Should you invest in blockchain tech?
Despite the innumerable advantages of using blockchain in the supply chain, it seems to be a mostly untapped resource. According to research conducted by PwC, only 5% of companies in the industry are currently using it. Much of its popularity and implementation will be driven by consumers’ demand for ethical production and transportation.
Its adoption will also be significantly affected by government regulations and, if companies operate multi-nationally, adhering to several different pieces of legislation might prove problematic. However, for businesses looking to enhance their operational processes’ speed, efficiency and reliability, blockchain might be unparalleled. If your company is part of a large, complex network or struggles with administration, it’s definitely worth investigating blockchain as a possible solution.