Blockchain: The Future Of Supply Chain Management

Blockchain: The Future Of Supply Chain Management

In the recent Verdantix operational excellence global corporate survey, 88% of the 301 respondents – decision-makers in operations, maintenance, engineering, process safety and IT – mentioned improving supply chain visibility as a high or medium priority for their firm in 2023. Additionally, 85% of firms in the ESG and sustainability global corporate survey identified supply chain risks as a significant factor influencing ESG and sustainability agendas.

Blockchain is a digital technology that allows for the creation of a decentralized, transparent and secure digital ledger. This technology enables the recording and sharing of information across a network of computers without the need for a central authority. In the context of supply chain management, blockchain can be used to create a shared, immutable record of transactions and data related to the movement of goods and materials. This can help to improve transparency, traceability, and efficiency in the supply chain.

For example, a company can use blockchain to track the movement of raw materials from their source to the factory, and then to the warehouse, and eventually the retailer. This can help to ensure that the materials are sourced ethically and sustainability, and that they are handled and transported in a way that meets the company’s standards. In addition to improving supply chain transparency and traceability, blockchain can also help to reduce the risk of fraud and errors. By using smart contracts, firms can automate the execution of certain supply chain processes – such as the payment to suppliers – based on the fulfilment of predefined conditions. This can help to reduce the risk of fraudulent payments and errors in the supply chain.

There are several firms using blockchain technology to improve their supply chain management. Dow Chemical partnered with ChemChain to help solve the issues of prompt responses, consistency and disclosure of information about formulations along the entire supply chain with blockchain technology. De Beers developed a blockchain platform called Tracr to help regulate their supply chain management system. The platform allows the tracking of any diamond from mine to store.

Despite the potential benefits of using blockchain for supply chain management, there are still some bottlenecks that are preventing its wider adoption. The technology is still relatively new, and many companies may be hesitant to invest in it without a proven track record. Additionally, there are also concerns about scalability, because the number of transactions that a blockchain network can process is limited by the computing power of the nodes on the network. However, solutions are being developed to address scalability issues, such as off-chain transactions, sharding and layer 2 protocols.

Overall, blockchain has the potential to revolutionize supply chain management, but there are still some challenges that need to be overcome for it to become more widely adopted. As the technology continues to evolve and mature it is more likely that we will see a greater number of companies using blockchain to improve the efficiency, transparency and security of supply chains.

If you would like to know the Top 10 Predictions For Industrial Tech in 2023, listen to the recent Verdantix webinar.