Blockchain – What Does it Mean for Supply Chains?


Blockchain is all the buzz in many industry communications today. It promises to significantly improve business processes, especially for global businesses, which work across different countries, entities and supply chain partners. Each blockchain enabled supply chain can span hundreds of locations with hundreds of product variables with hundreds of operations involved, making them quite complex.

As complexity grows, visibility and transparency suffer. With manufacturing globalized, multiple suppliers located in various countries and a wide range of transportation modes, transparency goes out the window and it gets harder to know the true cost to serve customers, let alone where and how a product is made.

This is where blockchain will transform the supply chain.

Blockchain will unify digital data by recording each transaction. Blockchain is a distributed, digital ledger that can be used for agreements, contracts, tracking, payment, trade, etc. In an article in Forbes, blockchain is further explained: “Since every transaction is recorded on a block and across multiple copies of the ledger that are distributed over many nodes (computers), it is highly transparent. It’s also highly secure since every block links to the one before it and after it. There is not one central authority over the blockchain, and it’s extremely efficient and scalable. Ultimately, blockchain can increase the efficiency and transparency of supply chains and positively impact everything from warehousing to delivery to payment.”

Let’s look at the three things blockchain brings to the supply chain.

Distributed Ledger – A virtual, distributed and permanent record of hundreds of business transactions between supply chain partners. Because blockchain is decentralized, data is resilient and more uniform, helping to standardize the way companies access and store important information and documents.

Smart Contracts – Blockchain supports the automated execution of terms, conditions and business rules, which make up the smart contract, and can automatically enforce the T&Cs between trading partners. With this capability, the ability to substitute a product for another could not occur because non-compliant transactions are not allowed.

Linking Physical Items – With blockchain, data is entered once and represented the same way across all transactions, such as a product description which will remain the same throughout the whole supply chain. Early adopters are supporting the use of GS1 Standards in blockchain to achieve serialization and ensure the systems interoperability that leads to unified commerce.

Another standard, Electronic Product Code Information Services (EPCIS), has the ability to transmit granular product details and identify individual physical events as products move through the supply chain. In conjunction with blockchain, EPCIS gives transparency to a customer, letting them know exactly where their product was made and what it is made of.

Many businesses are looking into blockchain for their supply chains, but others feel the technology is in its infancy, so they are waiting to see what will happen. It has promise – with the ability to track secure transactions throughout the supply chain, creating a permanent history of a product, from manufacturing to end user.

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