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3 Ways Blockchain Is A Supply Chain’s Best Friend

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Blockchain Supply Chain

Blockchain Supply Chain

Blockchain Supply Chain-It’s nothing short of magic, really, the way global trading partners do business today. The problems are obvious and acute: massive complexity exacerbated by an enormous amount of manual, still mostly paper-oriented processes.

Which is why blockchain—the networked distributed ledger technology—is gaining relevance in today’s global supply chains. Sanctioned blockchains provide their participants with a jointly managed, tamper-resistant mechanism for recording validated information. Its near-real-time nature helps minimize supply chain risks and accelerate operations across multiple geographies. It also helps supply chain partners simplify their business processes and workflows, while generating better guarantees on performance and outcomes. Finally, blockchain enables companies to adapt quickly to changing market conditions.

Already, companies are using blockchain to track supply chain anomalies, such as food contamination and counterfeit merchandise, and trace their origins. Among the other supply chain areas where blockchain networks can help:

1. Regulatory Compliance

Government regulations require companies to provide periodic reports documenting their compliance with business and trade laws. The process calls for a method to track and record the way products are acquired or produced—for instance, when and how a company got raw material from an approved forest or mine, or how it manufactured products in specific compliant ways. (Internet of Things systems are starting to play a prominent role in such instrumentations.)

For example, the government of Rwanda implemented a blockchain project last year to track the mining of tantalum, a “conflict resource” used in electronics manufacturing. (The blockchain provider, Circulor, uses Oracle Blockchain Platform to power its platform.)

Producing a report showing compliance means aggregating all of this recorded information, whether internally generated or from suppliers, and presenting it in a government-mandated format. Much depends on the validity of those records—and the ability to prove it.

Supply chain partners’ real-time visibility into the blockchain’s validated data cuts down on the cumbersomeness and lag associated with compliance reporting. Publishing IoT-instrumented records directly to the blockchain establishes an immutable audit trail and lets companies create their own specific regulatory reports, so that they don’t have to wait for their suppliers to do it. It also lets companies share those records with parties outside of the network—to show customers, for example, that material came from ethical sources.

2. Supplier Performance Management

Supply chain participants depend on the capabilities of their trading partners, who depend on their trading partners, and so on. That’s why it’s important to have a detailed, metrics-based view into the performance of the suppliers in the chain.

Most large companies score their suppliers based on metrics such as contract fulfillment, quality, volume, price, sourcing, and negative incidence rates, among others. Today’s performance-tracking mechanisms take time and might allow unethical suppliers to game the system.

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Article Credit: Forbes

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