As the U.S. manages the coronavirus pandemic and its consequences in international travel and trade, businesses are examining their supply chains and how to withstand these challenges. After all, good supply chain management is key to success and customer happiness.
Manufacturers often need global supply chains, which bring their own set of problems in identifying and tracking what is actually going into the product that they’re releasing out to customers.
Forward-thinking businesses look to technology to solve business problems. For supply chain management, should they be looking at blockchain?
Blockchain for supply chain management
Blockchain is a technology that takes the form of decentralized open-source ledgers that can record transactions in a verifiable and permanent way.
The blockchain has the potential to create a smarter and more secure supply chain, as products can be tracked through a clear and solid audit trail with near real-time visibility.
By implementing this technology, businesses in all industries could track materials, determine where they arrived, who received and handled them, and how and when they were transported to a next stage.
Seamless movement between suppliers and manufacturers
Right now, supply chains aren’t particularly agile, which isn’t good in industries where companies need to change configurations quickly and meet constantly changing supply and demand.
Because businesses in a supply chain can vary a lot in terms of their technology level and the way they communicate, it can be impossible to share data and collaborate efficiently.
Blockchain is decentralized, meaning no one entity controls it and it has no central point of failure in its infrastructure. A decentralized supply would allow frictionless movement between suppliers and manufacturers, whatever their size.
Blockchain and IoT can improve compliance, reliability and security
Blockchain and the Internet of Things (IoT) can be combined to impact supply chain management in powerful new ways. Like blockchain, IoT is a system that allows computing devices such as sensors and smartphones to connect and talk to each other.
But modern sensors are already advanced enough to track items, containers and pallets across the supply chain.
By combing the two, businesses get a true end-to-end visibility across the different stages of their supply chain, across different countries and companies they are working with.
Using IoT devices that monitor the status of the shipments and execute payments upon delivery, the finance teams would have visibility of the contract, sales order and delivery status— thus, speeding up the payment cycle.
Blockchain ensures the reliability and security of data, which will show that a business is being compliant with regulations and addressing safety.
How can your business apply blockchain to supply chain management?
Businesses interested in integrating blockchain technology into their supply chains should closely evaluate their strengths and weaknesses, understanding their pain points and where blockchain may be able to help.
It’s wise to start with small projects, reviewing these regularly in terms of progress and moving forward if suitable. This may involve the creation of internal blockchain, which will soon need collaboration with suppliers, distributors and customers.
You should also look at how blockchain can support your existing Enterprise Resource Planning (ERP) software.
It would allow you to see the processes and interfaces you already see but with the advantage of seeing the inventory of the entire supply chain instead of just your own, as well as relevant prices instead of placeholders.
And if your business is looking at working with partners, the blockchain could be built into a web interface using electronic data interchange (EDI) connectors.
The technology underlying our complex supply chain is undergoing a revolution – and the businesses that want success should ride this technological wave.