Supply Chain Management

Boosting paperless supply chain ecosystems

The area of supply chain management requires reliable and time-sensitive processes, offering many starting points for blockchain adoption

One of the most discussed areas of blockchain application is supply chain management.

Current supply chains would benefit of increasing traceability and visibility. In addition, a reliable, secure, shared, and immutable data management system could lead to reducing costs and increasing efficiency. Supply chain management and production tracking are essential for all internationally engaged companies. Just picture that 90% of goods traded internationally are shipped as ocean freight and millions of containers are transported across the oceans. Still shipment is a largely paper-based process. The pace of international trade is often slowed because of this multi-step paper-based process. The potential for digitalisation and blockchain application in the 21st century supply chain management is evident.

Blockchains could assist in not only eliminating the extensive paper trail of shipping, but also help optimise supply chains and implement compliance mechanisms. The cost of transportation could be drastically reduced by reducing production and transportation time. Furthermore, fraud and human errors could be tackled and possibly even eliminated as a transparent tracking system could be implemented. Supply chain related tasks, such as inventory management and logistics, could be planned in a more efficient manner and overall trust of consumers and corporate partners could be fostered.

How could a blockchain solution streamline shipment time?

Shipments can require up to 30 signatures and 200 instances of communication. This might sound exaggerated but has become a reality in international trade.

This amount of necessary paper-work and authorisation makes trade activities costly and at the same time vulnerable to delays. If a signature is missing, a container can be held for too long in a port, which could either make a complete shipment delay or at least delay the container.

Product information could be tracked on a blockchain and its different supply chain steps, linked to the initial product information, could be included and made available to regulatory authorities and law enforcement. Governmental agencies could already process the shipment authorisation while the product has not even been loaded into the transport mean, i.e. the ship, train, etc.

For the aforementioned reasons, traceability and transparency are vital in supply chain management. A robust blockchain network would offer an opportunity to revolutionise business activities in regard to supply chain management and allow trade at large scale and internationally. Thus, it is very attractive for internationally engaged companies

How could blockchain influence supply chains in general?

Blockchain-based solutions could allow the tracking of each and every single step in the supply chain. This would mean that every time a product changes ownership during production the transaction, product information, production steps, etc. would be recorded and safely stored on a blockchain. The complete process a product runs through from manufacturing to retail could be recorded. With it, potential delays, costs, and errors could be better managed and be handled more efficiently.

If an interoperable system is created, an international supply chain system could be established including all relevant stakeholders. With it, logistic steps and information, as well as trade-related documents would be stored, and could be monitored and analysed. This could help to better inform decision-making, but also offer new possibilities in regard to product certification. Manufacturers and retailers could for example certify products more easily as organic or fair trade because production traceability would be increased.

Overall, blockchain implementation would not only optimise resource input allocation, but also offer scalability, security, and reliability of supply chain processes and data.

This will probably require an “all-stakeholder involved” approach. Furthermore, data from multiple sources and in many forms will have to be uploaded into the blockchain. Mostly likely, this is not an easy task to accomplish as data is tracked currently very differently and large parts of the process remain paper-based.

Still, a blockchain solution offers a very interesting use case for logistic providers and internationally engaged companies.

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