Blockchain’s Critical Role in Supply-Chain Transparency

Date: Wednesday, December 23, 2020
Source: Supply Chain Brain

As global markets have expanded, supply chains have become increasingly complicated. Even the most basic ones involve numerous moving parts, each tied to specific times and locations. Managing these complex systems is an art unto itself, but it all comes down to one fundamental principle: transparency, or being able to see exactly where an item in the supply chain is currently located, where it came from, and where it’s going. And in the world of advancing technologies, there’s no better tool for achieving this than blockchain.

Blockchain technology is best known for its role in support of cryptocurrencies like Bitcoin, functioning as a ledger that records and tracks transactions. But unlike a traditional ledger, blockchain exists on a distributed network that makes it instantly accessible by anyone in the network with the right permissions. And, most importantly, because blockchain transactions must be agreed to be made on each ledger across the network, they cannot be altered, hidden, or otherwise tampered with. In an era where shared reality can be hard to come by, blockchain represents an important example of indisputable truth.

Here’s how these qualities make it uniquely suitable for supply-chain applications.

Transparency and Trust

Blockchain creates a unique record for every transaction within a supply chain. This solves one of the biggest weaknesses in today’s enterprise resource planning systems. As information and inventory flows are codified and recorded in the blockchain ledger, supply-chain managers gain complete visibility into the transactional history between retailers and suppliers.

This also eliminates many blind spots that exist in traditional record keeping, and provides a level of visibility that improves coordination between parties. Back-and-forth communications are reduced, because there’s a single source of truth that each party can refer to. Instead of calling a distributor to see whether a shipment is on its way, the ledger provides dynamic access to that information. Moreover, blockchain adds the vital factor of reliability to the equation. By their very nature, blockchain ledgers can’t be altered unilaterally. They record any and all changes made, and require consensus among the network to make them, so even if an item is deleted, there will be a record of when it happened and who removed it.

Real-Time Visibility and Reporting

Immaculate record keeping gives blockchain the ability to combat one of the biggest pitfalls in supply-chain management: execution errors. Inventory mistakes, duplicate payments, lost shipments — all of these can be difficult to detect and even more difficult to track down after the fact.

Blockchain provides an identifying element to every step within a supply chain, and it does it in real time. This makes it possible to see mistakes ​when they happen, and to adjust instantly as necessary, whether it’s correcting misinformation or updating schedules. This sort of early detection can avoid costly problem-solving later on.

Of course, some problems can only be discovered after the fact. If a shipment of lettuce is discovered to be contaminated by E. coli after it hits the market, a blockchain ledger will make it relatively easy to trace that contaminated sample’s history all the way back to the farm that it came from. You’ll be able to cross-reference everything it came into contact with, and begin your recall efforts with pinpoint accuracy. A blockchain ledger allows you to track recalls as they happen, providing full confidence that end consumers, as well as the brand’s reputation, are being protected.

Blockchain’s ability to provide unique identifiers for every step of a complex process sets it apart as the tool of choice for supply-chain managers. Imagine every transaction recorded with absolute certainty, and each item tracked accurately throughout the entire supply process. That’s what blockchain gives you the capability to do, and no other technology comes close to providing that same level of trust and transparency.

While it may have come to prominence as a method of securing cryptocurrency transactions, blockchain is well-suited for use in supply-chain management and a host of other areas as well. It’s only a matter of time before this cutting-edge technology becomes the industry standard, and “full visibility” goes from being a supply-chain manager’s dream to everyday reality.


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