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A shared, immutable ledger that makes recording transactions and tracking assets in a business network easier, blockchain is taking on a larger role in supply chain management these days. A vehicle for information in a fast, transparent manner, blockchain can be used to track orders, payments, accounts, production and other functions. Because members share a single view of the truth, everyone has access to the end-to-end transaction details.
Blockchain’s value proposition has increased over the last few years. “Operations often waste effort on duplicate record keeping and third-party validations. Record-keeping systems can be vulnerable to fraud and cyberattacks,” IBM points out. “Limited transparency can slow data verification. And with the arrival of the Internet of Things (IoT), transaction volumes have exploded. All of this slows business, drains the bottom line—and means we need a better way.”
Blockchain + Supply Chain
Supply chain management is one business area that stands to benefit from blockchain. In fact, a new report estimates that the global blockchain in supply chain market will post a compound annual growth rate (CAGR) or nearly 70% between now and 2030. Currently valued at $376 million, the market is poised for some significant growth as more companies adopt blockchain technologies as part of their supply chain management strategies.
In its report, Quince Market Insights says the market is largely being driven by the growing demand for supply chain accountability and enhanced protection of supply chain transactions. Seeking benefits like cost reduction, provenance monitoring, better consumer confidence, and less complicated recordkeeping and inventory tracking, companies are investing in and experimenting with more blockchain in their supply chains right now.
“Furthermore, the increasing need to eliminate intermediaries by automating supply chain operations and the advent of IoT are expected to provide lucrative growth opportunities for the blockchain in supply chain market,” Quince Market Insights reports.
“The increasing popularity of blockchain technology in retail and supply chain management,” it adds, “the need for supply chain transparency, and the rising demand for enhanced protection of supply chain transactions are the major factors in driving the blockchain in supply chain market.”
Blockchain in Action
Pharmaceutical companies can use blockchain to help decrease illegitimate activities like the production of counterfeit drugs, the illegal production of harmful medicines, and improper stock control. And in the food production space, Nestle recently announced that it would begin testing public blockchain technology to help streamline its dairy supply chain. According to Quince Market Insights, the food manufacturer is collaborating with Australian blockchain company OpenSC to “pursue assistance with blockchain solutions.”
Some other recent examples of blockchain in supply chain management include Volkswagen Group and IBM Corporation working together to monitor mineral supply chains using blockchain technology, as well as UPS’ investment in Inception Corporation for the development of blockchain-based e-commerce solutions for business-to-business (B2B) buyers and sellers.
Within the supply chain, blockchain can be used for inventory and cargo tracking; authentication and quality checks; freight and delivery improvements; and billing and payment management, among other functions.
“Blockchain technologies allow tracing the origin of goods from a store to a specific manufacturer,” inVerita reports. “This data is plausible since each batch of goods (or each individual product, if it’s something large or expensive) is equipped with a tag that constantly monitors the location of the goods and interactions between participants in the supply chain.”
And, IBM estimates blockchain technology in the supply chain could save the logistics industry $38 billion a year. inVerita says this will be possible with smart contracts that automate most of the workflow and business processes. “In addition,” it adds, “the distributed ledger will reduce errors, shorten delivery times, and allow fraud to be detected.”
