Disruptions in supply chain networks can lead to significant operational and financial risks. You
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Blockchain technology has received much attention over the last year with its ability to address
several business and economic challenges, including limited transparency and trust among
participants in the process, lack of regulatory clarity, high logistics costs, and heavy reliance on
manual or paper-based processes associated with product authentication.
As a result, the technology’s ability to move the global supply chain toward a more unified and
seamless system has been well documented. However, the current trend of centralization in
technology inhibits the blockchain’s potential for widespread adoption.
Blockchain-based solutions:
In 2017, only 15% of Blockchain companies used a decentralized network to secure data and
reduce costs. It is because of the difficulty in establishing consensus amongst all participants
when there is no single decision-making authority.
Blockchain networks are decentralized or distributed in nature. Usually, they require an
identifier to access or join their network, and transactions are verified by participants instead of
trusted intermediaries like banks or other financial institutions. As a result, the cost of
maintaining a centralized database and processing blockchain transactions is much higher.
These limitations have led some companies to seek out a decentralized applications (dAPPs)
based solutions, commonly referred to as Blockchain-as-a-service (BaaS), to manage the
necessary aspects of their supply chain.
BaaS service providers are moving away from traditional centralized systems toward more
distributed alternatives, which are also more secure and scalable. However, for BaaS providers
to build more accessible systems that more people can use, there needs to be an incentive for
adoption.
Product tracking with blockchain:
Blockchain is a one-way product data can be stored, accessed, and shared. However, some
companies want to include immutable records like the product’s origin story – how did it get to
where it is now? Can we prove that the provenance exists and use that to be more transparent
with our customers? This type of transparency has a lot of potential, especially when
combined with granular data access controls, which allow only certain people or applications to
view certain data sets.
In 2022, you can expect to see even more use cases for blockchain-based solutions in supply
chain management. There will also be new products that help companies adapt blockchain to
their specific business needs. For example, startups in blockchain supply chain management
solutions have worked with industries like agriculture and luxury goods to help them manage
their customer interactions. Blockchain solutions are critical to the success of these industries
because they are entirely automated.
Fostering innovation:
One crucial factor that may lead to greater adoption of blockchain technology is the ability of
companies to offer customized solutions for their customers. As a result, there will be a
significant increase in blockchain solution providers who can offer tailored products and
services that allow customers to build specific functionality into their supply chains.
The industry will also be able to provide unique solutions for each particular industry. For
example, the most popular use cases of blockchain today are food and agriculture to provide a
more reliable and transparent supply chain, financial services to enable peer-to-peer
transactions, and automotive to improve supply chain visibility.
Over the next 5 years, supply chain managers are expected to use blockchain technology to
authenticate products, verify product authenticity or quality, track product movements across
borders, manage supply chains or even help improve the entire supply chain from the farm to
the retail store. The blockchain is disrupting traditional methods of tracking products built on
trust and keystone models, allowing for centralization in data storage and processing.
As companies begin implementing blockchain technology in their supply chain management
systems, it will be interesting to see whether the technology’s limitations help or hinder its
widespread adoption. The ability for suppliers and customers to access and view data in a way
that allows for more transparency, privacy, and security will help the industry maintain stricter
regulatory standards.
Real-time transfer of funds and information with blockchain:
Companies must focus on a few essential things in their supply chain to capitalize on the
technology’s benefits. They must have a careful supply chain management and data security
plan, identify where blockchain can fit into their system, and develop a customized solution.
Many companies have found success in implementing blockchain for product authentication and
data security. In addition, newer ventures are looking at how users can use the technology for
payment transfers or even in an entirely new way by building new applications in-house.
Blockchain-based solutions will most likely lead to other innovations, such as point-of-use (PoU)
payments at retail stores that allow consumers access to their payment systems using NFC-
enabled smartphones and tablets.
