The impact of blockchain on the supply chain, 5 companies to watch in 2020

A supply chain is a combination of people and businesses whose primary aim is the distribution of goods and services. Blockchain has emerged as a helpful way to achieve more successful performance too. It entails everything, but not limited to, extraction of raw materials and delivery to the end-user who purchases the product. Fundamentally, a supply chain is a system involving the production of raw material, manufacturers who process it into a marketable product, transportation to the market as well as the retailers who sell it to the consumer.

Managing today’s supplies and creating a link to the distributed product is an entirely complicated thing altogether. Some products range over thousands of miles, going through multiple stages before reaching the intended consumer. A host of challenges comes with these complexities, which can quickly get out of hand. Below are some ways and examples of how blockchain can revolutionize the supply chain.

The impact of blockchain on the supply chain

Relevance of blockchain

1.)   Curing the EDI problem

One of the most significant reasons for inefficiency in chain supply inefficiency is the over-reliance on electronic data interchange systems. When it first came into existence in the 20th century, the EDI was considered a revolution to the supply chain. However, this technology has many flaws that throw if off-balance.

Although it might be beneficial in performing some tasks, they offer a tough time processing a continuous influx of data from different sources as well as bringing into board new clients with different configurations. All of these massive shortcomings can be cured by blockchain, whose value proposition is the ability to handle extensive multi-party data. The logic behind this is that no inventory can be in two places concurrently. Move a finished product from the store, put it on transit, and update the status for everyone.

2.)   Cost savings

Thousands of dollars are lost because of the inefficiencies of supply chains. This loss is particularly common in industries that need a constant flow of perishable products, such as the flower industry. Blockchain has improved data transparency and tracking that offers efficient monitoring on different parties to efficiently manage the flow of products. It has also minimized transactions moving in and out of banks and payment processors and the overall associated fees. Such fees reduce profit margins, also taking them out is very significant.

3.)   Interoperability

The current supply technology has problems with integrating data from every partner in the process. This system finds it difficult to integrate data from different partners as well as the accessibility of this information. Blockchain, in contrast, has maintained a unique and transparent system in its design of the network. Every new party is adding data to the network and making its accessibility to every party viable. Anyone can access all information held on the web, and every broadcast being made by one can be known by another party.

4.)   Strengthening records

All relevant parties confirm all data stored in the system. The documents are traceable and immutable, considering that blockchain has enabled the integration of different companies to store information about the products they have as well as their location, things affected more easily. Any party that can see the movement of products as well as checking the data records cannot modify the files without approval by the other signatories. Overall, this transparent and detailed inventory of product flows enables stakeholders to make better decisions. Customers also fight fraud and remain secure from counterfeit products, which generally improves transparency.

5.)   Equality

Most of the benefits of the blockchain technology lean on big supply chains, but not limited to them only. More prominent companies are putting in significant investments to ensure the success of product flow, something that can be implemented by upcoming companies also. Even though, for the time being, blockchain is more about large institutions, smaller companies will be able to participate in this integration, and consequently, attain an equal level of success the larger companies have achieved.

Examples of chain supply networks utilizing blockchain technology

1.)   Morpheus chain supply network

The Morpheus network design is made in a prototype of the largest financial, shipping, and customs firm to create an efficient supply chain system. Quick contacts, as well as an automated supply chain, freight, and clearance are created and monitored within the network. Additionally, payments are processed using the SWIFT transfer hub, along with tracking charges and minimizing additional bank charges.

2.)   Skuchain

Skuchain is a private network created particularly for businesses in the international business domain. It provides a blend of blockchain technology as well as the internet of things (IoT), and radio frequency identification(RFID). All stakeholders can use this platform to control inventory procurement and the flow of physical goods. However, the private nature of the network does not allow decentralized operations, several versatilities, and smart contracts. This is the only drawback that could hinder its extensive utilization.

3.)   Insolar

This is the flagbearer network in support of private and public blockchain concurrently. It can enable shifting from other blockchains as well as integrate with ongoing enterprises. Traditional smart contracts are, by nature, immutable, which has several versatilities, but in solar has offered the first allowance for amendment of smart contracts. Amendable smart contracts are vital for businesses that are well-versed with blockchain since they show how contract parties act ideally.

4.)   Hyperledger fabric

The design of this private network is made specifically for business applications. Hyperledger architecture allows for a broad range of business applications, which include supply chain and smart engine networks. Unlike in solar, hyperledger only utilizes private technology, which has made it less decentralized. Also, it has lesser versatilities because it can neither allow amendment of smart contracts nor interact with other chains.

Conclusion

Blockchain is a technology that is transforming businesses in a wide range of ways. The supply chain has many complexities that, without the utilization of ideal technologies, would fade in the diversities of challenges. Using blockchain would eliminate fraud, inefficient processes, and inefficiencies associated with traditional models. Versatilities offered by this technology would elevate supply-chain businesses to an entirely new level.

By Jyoti Behl, who is an avid research scholar at Griffex. See more blockchain stories here.

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