Supply chain management (SCM) is mainly involved in moving raw materials and work-in-progress inventory from the point of origin to the point of manufacture and finally to the end customer while keeping the expenses at the lowest possible cost. This entire process is dedicated to making a loyal consumer base and enhancing brand loyalty which finally adds to the company's growth. This whole process has to follow a strict schedule to deliver the product to customers as per their demands.
On the other hand, blockchain is a digital bookkeeping mode or a ledger that deals with cryptocurrency and can be distributed. Cryptocurrency can be tracked and can also be used in smart contracts, payment and exchange of agreements. Every blockchain transaction is recorded into blocks that are a part of the blockchain. It is slowly being integrated into supply chain management in recent times. To become a supply chain analyst, knowledge about blockchain is becoming a mandatory requirement as well. Let us delve deeper into how blockchain works in supply chain management.
Blockchain in supply chain management
With nearly every aspect of our day-to-day lives digitalised, the supply chain world is also steadily moving in this direction. This is where blockchain in supply chain management comes in handy. From order tracking to secure transactions, blockchain is paving its way into the core of SCM, especially in industries like retail and consumer goods that are experimenting with its use case. As a permanently extant and safe digital ledger, it helps reduce fraudulence, errors, and even tracking fees.
Applications of blockchain in supply chain
With blockchain gaining significant popularity, robust corporations and startups are experimenting with the variegated uses of technology and blockchain innovations to carry out multiple needs.
Blockchain has been widely used in the food industry, and one striking example is Walmart. The company has started using blockchain for product tracking to the end users. Walmart tracks products like pork meat sourced from China and uses blockchain to keep a record of every piece related to the placement of the order to the consumer. This tracking function also helps investigators to locate and remove unreliable sources and blacklisted factories that provide meat carrying food-borne diseases.
Payment processes for automotive suppliers
Blockchain can help in approaching businesses with a global supply chain easily. One great example is Tomcar, which is an Australian vehicle manufacturer. It pays its suppliers with Bitcoin.
The solar industry uses smart contracts to redistribute excess power. Blockchain has a Transactive Grid application that helps keep track of and redistribute energy. They use a platform called Ethereum to run this program to help with smart contracts and automate the sale of green energy by cutting down on cost and pollution.
A patient’s medical records can now be accessed from anywhere in the world with the help of blockchain. The healthcare industry of many countries is now providing key access such as patient fingerprints via which their entire medical history can be viewed. This can alert a paramedic to help them identify any problem and prescribe the necessary medication.
Importance of blockchain in supply chain
Integrating blockchain in SCM has its benefits, from saving money and time to preventing potential risks of cyberattacks and hacking. Businesses are steadily implementing blockchain in their logistics operations to reap the following advantages:
- To help trace the material supply chain with ease by meeting corporate standards
- To improve compliance and visibility when it comes to outsourced contract manufacturing
- To cut down on losses from grey (counterfeit) market trading
- To reduce administrative costs and additional paperwork
- To enhance corporate fame by providing transparency of raw materials used in products
- To reduce any risk of supply chain malpractice
- To engage stakeholders
- To enhance trust and credibility of shared data
Legal considerations in blockchain use
Every organisation should consider legal issues when using blockchain in SCM and business logistics. We have listed a few that businesses need to follow:
- Blockchain-based agreements
- Enforcing awards against foreign entities
- Privacy protection laws
- Disputing resolution mechanisms
- Transporting regulatory prerequisites
- Risks of cybersecurity
Disadvantages of using blockchain
Blockchain might seem to answer all your problems relevant to supply chain management. However, you should keep the following downsides in mind if you are considering implementing it in your business operations:
- Lack of standards
- Regulatory issues
- Lack of industry support
- Not seeing value
- Lack of awareness
The supply chain industry faces multiple challenges daily when it comes to cost, quality, and speed. These parameters are slowly and steadily being achieved with the help of blockchain in SCM. It is still under experimentation and almost deemed a niche concept. The job market is seeing a demand for expert professionals in this field. To become a supply chain analyst, you need to have specific certifications for supply chain professionals. This can be acquired by taking up a reliable supply chain management course with analytics offered by Imarticus.