Traceability and transparency are two of the most important foundations of logistics. Blockchain is the new “buzz word” in supply chain that’s becoming synonymous with both. But what is it and is it really all that buzz-worthy? Read on to find out.
What is blockchain?
Blockchain (for supply chain) is a digital distributed ledger which creates one central digital place where every sort of document related to a shipment could be stored. Users can access, inspect, and add to the data, but they can’t alter to delete it, keeping the data completely secure.
The best-known programs for supply chain blockchain are by Maersk and IBM.
How is blockchain used in the supply chain?
This technology is used to improve greater visibility in tracking and tracing shipments. It’s especially useful for enhancing the trackability of food and drugs as guidelines get more and more stringent in regard to tracking. Many companies are using this adolescent technology to lower the cost of doing business regarding things like factoring and strategic procurement, especially in international markets.
Who is using blockchain?
It’s being used in Indonesia to track food from “hook to fork” in an effort to provide authenticity of products. Others are using it to reduce international costs in procurement. Still, others are using it to collect and store information to share with auditors and regulators.
Why you should use blockchain
Blockchain has many benefits; here are just a few to consider:
- Enhanced Transparency. Blockchain documents a product’s entire lifecycle, from origin to delivery and every touchpoint in between. This increases trust and eliminates the opaqueness in today’s supply chains. Manufacturers can also share logs with OEMs and regulators.
- Greater Scalability. Multiple people in many locations can access and add to data.
- Reduce Time Delays, Added Costs, and Human Error.
- Better Security. A shared, permanent ledger with codified rules could reduce or potentially eliminate the audits required by internal systems and processes
- Increased Innovation. Since it has decentralized architecture, finding new uses for the technology is nearly certain.
While blockchain is full of benefits, it should be noted it is still a young technology and is still at the beginning of its development. Large companies will need to make their supply chain partners participate within the system for it to work and that may hinder the drive to create a standards guideline.
Beta and pilot programs are currently in force and available to companies.