With so many processes and businesses involved in just one supply chain, maintaining transparency can sometimes become a challenge. But, what exactly is supply chain transparency and why is it important? Supply chain transparency refers to the accessibility of information regarding the processes within a supply chain by internal and external stakeholders such as customers, investors, and regulators.
While supply chain transparency is important for several reasons, the most important one is the growing demand from consumers for more information about the origin, production, and ethical practices related to the products they purchase. Environmental impact and labor practices are examples. Customer is king goes the popular saying. Your organization must have transparent supply chains to remain competitive and profitable. Moreover, the call for supply chain transparency acts such as the Business Supply Chain Transparency on Trafficking and Slavery Act of 2020 is indicative of the need for transparency at all levels of supply chains. Blockchain is one way you can enjoy the benefits of supply chain transparency by increasing consumer trust.
But how? This article will provide a comprehensive guide on how you can leverage the power of blockchain to achieve transparency and minimize supply chain disruptions.
The Emergence of Blockchain in Supply Chain
The first thing that probably comes to mind when you hear the term blockchain solutions is Bitcoin. Discussion of blockchain for transparency in the supply chain was unlikely, at least until it became a buzzword in the industry. In recent years, blockchain’s uses have extended from cryptocurrency to other industries and sectors, such as supply chain.
The emergence of blockchain in supply chains began around 2014, with industry leaders referring to it as a technology that would enhance transparency in supply chains. And with that, many organizations, small and large began adopting supply chain transparency software.
For example, the IBM Food Trust platform, launched in 2016, focused on using blockchain to enhance traceability and transparency in the food supply chain. It enables stakeholders, including producers, distributors, retailers, and consumers, to access a secure and immutable record of the journey of food products, from farm to table. This not only helps in preventing foodborne illnesses by quickly identifying and addressing contamination issues but also builds consumer trust by providing detailed information about the origin and handling of food items.
Mechanisms of Blockchain for Transparency
So, why blockchain for transparency in supply chain and not any other technology? Well, it all goes back to its features.
- Immutability and Tamper-Resistance: The immutability of blockchain records provides that once you add data to the chain, no one can alter or delete it without consensus. This feature is crucial for maintaining the integrity of supply chain records and preventing unauthorized tampering.
- Decentralization: Decentralization eliminates the need for a central authority, reducing the risk of a single point of failure or manipulation. Since supply chains involve multiple stakeholders, a decentralized system ensures that no single entity has control over the entire process, promoting fairness and transparency.
- Distributed Ledger: The use of a distributed ledger ensures that every participant in the supply chain has access to the same set of information in real time. This reduces information asymmetry and allows all stakeholders to view and verify the entire transaction history.
- Cryptographic Security: The use of cryptographic techniques in blockchain ensures secure transactions, identity verification, and access control. Public and private key pairs enhance the security of data and provide verifiable identities for participants in the supply chain.
Real-World Applications of Blockchain in Supply Chains
Since the adoption of blockchain for supply chain transparency, there are several real-world applications we can learn from, including:
Streamlined Logistics
Blockchain streamlines logistics in two ways: traceability and transparency. The ability to trace the journey of products from the manufacturer to the end consumer is crucial in logistics. Blockchain’s immutable ledger enables detailed and transparent tracking of products at each stage of the supply chain, facilitating quick identification of issues and reducing the time needed for problem resolution. As for transparency, blockchain provides a shared, decentralized ledger that allows all involved parties to have real-time visibility into the entire supply chain. Supply chain visibility and transparency help in better decision-making which allows companies to proactively address issues such as delays, diversions, or damages.
One example of blockchain transparency in streamlining logistics is TradeLens, a blockchain-based platform for global trade created for Maersk by IBM. Although discontinued in 2013, TradeLens provided end-to-end visibility into the supply chain for Maersk and its partners, including shippers, port operators, and customs authorities, and in turn, accelerated the flow of goods.
Counterfeit Prevention
The global market faces significant challenges related to counterfeit products, especially in industries, such as pharmaceuticals, electronics, and luxury goods. Blockchain offers a solution by providing a tamper-proof and transparent record of a product’s journey through the supply chain.
Blockchain’s immutability feature ensures that once manufacturers record information about a product in the blockchain, no one can change it. This ensures that the product’s origin and authenticity remain intact throughout the entire supply chain. Moreover, features like QR codes or RFID tags linked to the blockchain are essential for secure authentication. Consumers can scan these codes to verify the product quality and authenticity and access information about its manufacturing, shipment, and distribution.
Smart Contracts
Smart contracts are self-executing contracts with the terms directly written into code. In the context of supply chains, smart contracts on the blockchain automate and enforce contractual agreements, thereby reducing the need for intermediaries, minimizing the risk of disputes, and enhancing transparency. For example, upon successful delivery of goods, a smart contract can trigger the release of payment to the supplier, streamlining payment processes and reducing delays.
Additionally, the blockchain’s immutable feature ensures that once you deploy a smart contract on the blockchain, no one can change its terms without consensus from the network. This transparent execution of smart contracts enhances trust among participants.
Future-Proof Your Supply Chain Transparency
Supply chain transparency is becoming increasingly essential, not just for stakeholders, but for the overall operational efficiency of supply chains. As such, to avoid common supply chain risks related to the lack of transparency and future-proofing your supply chain, you can leverage Surgere’s SaaS solutions, which seamlessly integrate IoT technology and a diverse array of tagging and hardware options.
With Surgere, you get real-time insights into your supply chains, safeguarding you against potential risks associated with insufficient transparency at any level of the supply chain. Contact us today, and let us help you attain supply chain transparency.
