Home eCommerce, Web 3.0, blockchain, nft and metaverse How Blockchain is Revolutionizing the Supply Chain

How Blockchain is Revolutionizing the Supply Chain

The supply chain is an essential part that every company must take care of if it wants to be truly competitive in its sector. Five key players participate in it: suppliers, producers, distributors, retailers, and finally customers. In the global industrial environment in which we live today, keeping track of each of these parts is complex, especially since each actor often intervenes from a different part of the world.

Getting each of these participants to collaborate is key to having a consistent and efficient supply chain system. If this is not achieved, there will be a negative impact both on the profitability of the companies and on the final sale price, which ends up harming customers.

Fortunately, there is a technology that promises to make supply chain management more efficient, flexible, and profitable. This is Blockchain, the technology behind Bitcoin, which is presented as a new way of understanding business thanks to its transparency, immutability, and decentralization.

Blockchain to face the challenges of the supply chain

Blockchain technology has become very popular in the last decade thanks to cryptocurrencies. However, it can be said that it is a technology that is still in its early stages. Even so, shortly, its use is expected in multiple sectors, the supply chain being one of the most promising due to its complex environment.

Blockchain, which in Spanish means chain of blocks, is a technology that allows the transfer of encrypted digital data in a complex way to guarantee the security of the information. A key characteristic of this system is that said information does not have intermediaries or owners but is distributed in different nodes (computers) that are independent of each other. In this way, data is recorded and validated without the need for trust between them.

The highlight is that the information registered in the Blockchain cannot be deleted once it has been entered. It is only possible to add new records that the majority of those involved must approve. Therefore, it is not possible to manipulate or alter data, unless the entire network agrees.

Supply chain problems

Thanks to the way Blockchain works, one of the big problems in the supply chain is eliminated: the lack of transparency, which leads to inconveniences associated with costs and customer relations, which in the end can negatively influence the brand name.

Blockchain provides a proper tracking mechanism for the supply chain. In this way, the tracking of the origin of the components becomes easier and the product information can be accessed through the help of elements such as RFID tags and integrated sensors. In short, with Blockchain you can trace the history of a product from its origin to its current location.

Being able to trace a product from start to finish in the supply chain also eliminates the problem of poor customer service. Remember that the process does not end when the product is distributed to retailers. After delivery, proper customer management must be carried out, since they are an essential part of the chain.

Companies must then satisfy customers’ needs and respond to their concerns so that their reputation is not affected. If the company does not do so, it will surely lose that client, and the worst thing is that it will not be just one, since many more will follow. Keep in mind that in the age of social media, complaints about poor service can spread quickly, which will undoubtedly mean the loss of many customers in the long run.

Advantages of using Blockchain in the supply chain

Blockchain promises to eliminate these problems in supply chains by increasing transparency, reducing costs, tracking specific items at each stage of their journey, and enabling better customer-facing management. And it is that with this technology each participant in the chain can visualize the progress of the merchandise, identify where it is and what its status is, among many other things.

● Transparency

Since records are transparent and immutable, Blockchain can be used to record data on the location and ownership of products and materials. And so, anyone in the Blockchain supply chain can monitor everything while the move is happening. Also, because the data records are unchangeable, there will be no question of who is responsible if something goes wrong.

● Cost reduction

Inefficiency within the supply chain can result in many economic losses, especially when it comes to industries that work with perishable products. By having greater transparency in management, companies can more efficiently and quickly identify the areas where losses occur. And with this information in hand, they can establish measures that allow cost savings.

Uses of Blockchain in the supply chain today

Blockchain technology can transform the supply chain of companies in many ways. For this reason, many companies are already adopting systems based on it. Since this technology makes it possible to know the place of origin of the product, companies such as De Beers, one of the largest diamond producers in the market, have begun to use it to avoid so-called ‘blood diamonds’. And it is that the Blockchain allows, among many other things, to detect copies and copyright infringement.

Numerous food companies are also betting on the use of Blockchain in the supply chain. One of them is Walmart, which has a food traceability project; for example, the traceability of the origin of pork comes from China. They are also planning to track food from farm to store in real-time.

Another big company that wants to take advantage of Blockchain is Unilever. The company is using this technology to manage the tea supply chain process. One of his projects involves tracking tea farmers in Malawi, the main supplier of tea leaves.

In the logistics sector, companies like FedEx and Maersk are also leading the way toward the use of Blockchain in the supply chain. Therefore, it is thought that although this technology is still in the maturing phase, the time to include it in the ‘supply chain’ has already arrived.

There is no doubt that Blockchain has introduced its potential to generate positive changes in the supply chain industry. That is why it can be expected that in the coming years, it will grow at a very fast pace. With this in mind, companies must explore the different ways to embrace the change that this technology has to offer, especially to help eliminate vulnerabilities and inefficiencies in today’s supply chain management.



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