End to end visibility is the holy grail of supply chain management. Visibility is required for precise planning, execution, and resilience. Unfortunately, most organizations have limited visibility of their supply chains. Those that have achieved high end to end visibility have done so using technology that is costly to implement and operate.
Blockchain solutions set a new standard for supply chain visibility. They provide a superior integration model and deliver more realtime information than prior options based on VANs, GDS services, and cloud hubs. Blockchains also allow partners to use flexible formats and automate complex interparty agreements. With blockchain technology, partners are able to optimize their processes to meet their true supply chain requirements. Blockchain technology makes this possible without having to pay and trust a third party.
By sharing data in a trusted, distributed ledger of transactions, each supply chain participant has access to a single, trusted source of truth. This provides the visibility that enables advanced supply chain management capabilities. Blockchain technology, like Hyperledger Fabric, which is built for enterprise use, provides this visibility while allowing trading partners to manage how their information is shared within the network. This allows proprietary transaction information to remain private.
Regulatory and operational concerns increasingly require tracking the provenance of materials and goods. Blockchain technologies can be used to provide a tamper proof certificate of authenticity that follows an item through a supply chain. This allows organizations to meet regulatory requirements and ethical sourcing policies. It also makes it easier to handle recalls and other operational exceptions.
Suppliers must comply with a substantial list of regulations and buyer requirements. Various protocols exist for asserting and auditing compliance. Blockchain provides an opportunity to associate certifications of compliance and audit findings with specific batches of goods or single items. This documentation can then be made available to, and trusted by, all users of the items throughout the supply chain.
As materials move through a supply chain they may be tested at each step. Often such testing is duplicated as materials move from a supplier to a buyer. Blockchains can be used to capture quality test results directly from testing equipment. This allows a supplier to run atest and give buyers direct visibility to the tamperproof test results which eliminates the need for costly retesting.
Typically, full information about an item or a batch’s state is spread across systems making it difficult or impossible to get a holistic view. While cloud based supply chain solutions tout their ability to provide a single view, they introduce an intermediary that all parties become dependent on. Blockchain networks provide a superior solution where the participants get the visibility they need, in a system they can trust, without the need for an intermediary.
Materials or goods stuck at border crossings slow supply chains and final delivery in ways that reduce predictability and impact customer satisfaction. Blockchain systems are being used to allow suppliers, logistics providers, and customs agencies to work with the same data about goods shipments. This approach is digitizing previously manual processes and making existing digital processes work more efficiently since discrepancies are eliminated.
Inconsistent payment terms and practices, invoice creation, and invoice verification all contribute to making payment one of the most complex aspects of modern supply chains. Blockchain technology lets suppliers and customers transform these processes by automating their agreements using smart contracts technology. This reduces or eliminates the need for invoice verification and can be used to fully automate the payment lifecycle.
Blockchain technologies include “smart contracts”, which are digital, executable interparty agreements. Smart contracts are being used to transform processes through techniques such as multi party goods receipt acknowledgement (potentially including 3rd party inspection) that immediately initiate payment. These solutions significantly reduce friction in goods flows.
The shared transaction and activity record that blockchains provide brings suppliers and buyers together with near realtime information that they can trust, eliminating the need for many supply chain activities related to disputes. When disputes do arise, trading partners have a single source they can turn to for all transaction and activity data. Early adopters are already seeing this dramatically reduce the time to resolve disputes.
Blockchain technology opens up other opportunities for supply chain transformation including simplification of trade finance and real time management of asset transfer and capitalization. Some are combining blockchains with IoT technology to record trusted sensor data that allows trading partners to immediately identify quality issues and adjust plans accordingly.
Our view is that blockchain will form the backbone of a new generation of supply chains. The technology is ready today. It may take some time to for the bulk of suppliers and buyers to connect into new blockchain based business networks. However, those who start now will be able to gain a competitive advantage.
Our team is ready to collaborate with you and your partners to review the key supply chain challenges you face and consider the opportunities to address them with a blockchain based business network. We’ve already successfully implemented blockchain based supply chain solutions for global manufacturers. Contact us for more details on how we can help you get started transforming your supply chain with blockchain technology.
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Originally published on LinkedIn and written by Chainyard CTO...
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Originally published on LinkedIn and written by Chainyard CTO...
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