Here’s something to chew on: how would an 18th century merchant manage his or her goods as they crossed the Atlantic Ocean? (Keep in mind that they could use pen and paper, and basically nothing else.)
It’s tough to contemplate, especially when you consider the product losses that routinely occur within today’s far more advanced shipping operations.
Supply chains are imperfect, even with a roster of modern conveniences at their disposal. Despite the internet, cell phones, and management software, businesses lose significant sums of money each year from supply chain inefficiencies. This is where blockchain technology could offer major advantages.
Blockchain is a distributed ledger that could unify records between suppliers. A producer of raw materials in China would have access to exactly the same data as their business partners in America. This would provide greater checks and balances to identify where errors occurred along the supply chain.
Blockchain technology also offers benefits of automation. Assigning routine tasks to a blockchain protocol will save money and eliminate human error. Supply chains don’t sleep, so their oversight shouldn’t rest either.
All the Red Bull in the world won’t prevent inevitable human errors. Replacing people with blockchain-powered systems will do the trick. This technology provides a kind of transparency and efficiency that could transform supply chain management in a way not seen since the internet went mainstream.
The following experts expanded on the benefits that blockchain could provide for supply chain management.
1. Bhagat Nainani, Group Vice President of IoT and Blockchain Applications Development, Oracle
“The immutable distributed ledger improves transparency and trust between suppliers and production, which can quickly resolve disputes and save significant amounts of money. Resolving disputes can be expensive, adding 12-15 percent of the cost. Blockchain-enabled applications can reduce the cost of dispute resolution by 30-50 percent. That's such a big business benefit for relatively low cost blockchain applications.”
2. Sylvie Thompson, Associate Partner for Supply Chain Optimization with Infosys Consulting
“Traceability for food and pharma presents a major benefit for those companies using blockchain. Luxury brand owners appreciate the ability of blockchain to verify product authentication and prevent counterfeit products. Logistics companies recognize the ability of blockchain to further digitize paperwork and connect documents to specific steps in the chain. What is surprising to us is the limited utilization within the retail industry, as we see significant and unique benefits blockchain could deliver to this industry around consumer experience, loyalty programs, and returns management. The benefits of blockchain are endless and industry specific, offering significant advantages to individual supply chains.”
3. Marc Degen, Co-founder of Modum
“Blockchain itself does not create any value nor benefit – as technologies by itself do not solve issues or create value, new technologies rather tend to create new issues. But products and services built on new technologies have the potential to create value add across different domains. Supply chain management is about mastering the synchronization of 3 items: assets (=the goods itself) and their information and value flow. With IoT we have powerful solutions that allow to create digitalized twins of real world assets and with blockchain technology we have the ability to transact information and value at the same time without the need of controlling intermediaries. This full digitalization of the 3 elements of a supply chain allows a significant step up to automate and hence optimize the inefficient supply chain settings – from domestic small setups to cross-national large and complex value chains.”
4. Steve Treagust, Global Industry Director at IFS
“The ultimate benefit that blockchain brings to supply chain management very much depends on the type and size of the supply chain. I outlined six business benefits of blockchain in a recent blog post, including efficiency, auditability, traceability, transparency, security and feedback. Any of these six could be the number one benefit depending on the business and their individual goals.
If I was to pick one benefit that most applies to all supply chains it would be traceability. Being able to trace a supply at any time during and after the chain has been completed can provide a competitive advantage, allow organizations to comply with ever-changing regulations and create overall efficiencies.”
5. Ken Evans, CEO of Konexial
“The number one benefit that blockchain brings to supply chain is the speed of transparency. Being able to clearly see the flow of material and information from elements to consumers will be powerful. It enables companies to see details that have been hidden in their supply chains.”
6. Gert Sylvest, CTO and Co-founder and GM of Tradeshift Frontiers
“With a distributed ledger system, you can ensure that records can’t be manipulated or faked, and you create visibility for all parties without needing to trust a central authority or government. It allows trust between entities that otherwise would not trust each other. But we need to agree on an ownership and governance mechanism first.”
7. John Thielens, CTO of Cleo
“Today’s supply chain networks are effectively mesh networks that grow slowly, painfully and expensively as business agreements are negotiated and technical implementations follow. Blockchain-powered ecosystems offer the promise of nearly instant agreement and technical enablement, increasing the agility of a business to make new connections by an order of magnitude. Today, agile businesses focus on advantage, while those without focus on survival.”
8. Christiaan Sluijs, CFO of T-Mining
“Most value is seen in optimising business processes through reducing the amount of paper or through beter exchange of data. However, these benefits are just a start. And blockchain is not always the best technology for a given problem. However, more and more, blockchain will be used to create a “neutral” platform between stakeholders, which might disrupt the business model of traditional “centralised” platforms today.”
9. Scott Carlson, Head of Blockchain Security at Kudelski Security
“The most outstanding benefit we see in blockchain is automation and removal of the delay of paperwork for instant settlement. This enables settlement-based lending, goods financing, goods tracking with finer details, and can help in proving the ethical nature of a process.”
10. Srinivasan Sriram, CEO and Founder of Skuchain
11. Grant Blaisdell, Co Founder of Coinfirm
12. Aba Schubert, CEO of Dorae, Inc
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