The supply chain sits at the core of every trade. Smooth and efficient supply chain management is a must for any enterprise. Orders, shipments, and payments have to be in sync for each transaction for smooth supply chain management. Although supply chain activities appear to be straightforward, they are significantly complex. Such complexity has further increased with the world becoming a marketplace. Many corporations have to handle their supply chain on a global scale on a daily basis.
Increasingly, technology is being leveraged to solve multiple problems in the supply chain space. Labelling of inventory with RFID tags or digital product identifiers, and connecting the inventory movement with the ERP (Enterprise Resource Planning) to remove execution problems including inaccuracies in inventory data, missing shipments, and duplicate payments among others are prevalent now in the supply chain space. Despite such interventions, the scope for improvement exists and blockchain technology can be impactful. It can create complete, transparent, tamper-resistant records of all the information flow, inventory flow, and financial flows of every single transaction through its decentralised ledger system. Other distinct features like tamper-proof ledgers with complete traceability make blockchain-powered solutions ideal for streamlining supply chain management. Many specialised players like Dhiway Networks are enabling several organisations to improve their supply chain by leveraging blockchain.
Blockchain in Supply Chain:
Blockchain technology is bringing rapid transformation in the supply chain space. Through providing increased transparency, security, and efficiency, this technology holds the potential of revolutionising the supply chain process in multiple ways.
Supply chain management involves the process of planning, coordinating, and executing the flow of goods and services from the enterprise to the end user. This process involves multiple stakeholders including suppliers, manufacturers, distributors, retailers, and consumers. At the time of execution, multiple parties enter into several agreements. Blockchain technology transforms these contracts into smart contracts through automation. With smart contracts, every transaction and movement of goods can be recorded and tracked on a shared ledger, which is visible and verifiable by all participants. Therefore, trust, accountability, and traceability are established. Using automation, manual processes are eliminated. This reduces cost and the chances of fraud and error. Moreover, much of the paperwork can be eliminated, saving both time and resources. Smart contracts can execute predefined actions based on defined conditions. For instance, payments to vendors, transferring ownership, or triggering alerts can be accomplished through these smart contracts. Thus, manual interventions are mitigated, which reduces manual errors, delays, and fraud.
Ease in trade financing:
Smooth supply chain management can’t be achieved without an efficient trade finance process. And for trade finance to be efficient, document processing has to be seamless. Blockchain plays an important role in making document processing and administration visible across the supply chain through its decentralised ledger system. For instance, each stakeholder exactly knows where the goods are in transit in case of a shipping or air transport mode. Moreover, blockchain-based solution does away with any paper-based documentation and needs for its transportation to relevant parties. Such ease of documentation boosts the trust in the entire system and provides financial institutions the comfort of granting several trade financing facilities such as LCs (letters of credit), overdraft, and bank guarantees among others. Improved trade financing eventually leads to business growth across the spectrum.
Quality control & Product authentication:
For a manufacturing concern like an automobile company or a pharmaceutical firm or a retailer, ensuring the quality of the product is of prime concern. In many instances, it has been seen that counterfeit products swamp the market, making a dent in the reputation of the original manufacturer. In this perspective, blockchain can be leveraged to verify the authenticity of products and prevent counterfeiting by enabling secure and tamper-proof records of a product’s origin and movement throughout the supply chain. As the movement through the whole supply chain is traced, quality is ensured by faster identification and subsequent removal of defective products.
For any food manufacturer, the safety of the food material is of prime importance. Because, any compromise on food quality not only brings reputational risks for a company but also puts the firm into many legal obligations. Therefore, tracing the food manufacturing process becomes important. Blockchain can be leveraged to track and monitor food safety, ensuring that food products are safe for consumption by providing a transparent and traceable record of the product’s journey through the supply chain.
Inventory is the single most important thing that determines the outcome of any production process. A high level of inventory depresses profit, while a low level of inventory has the potential to disrupt the production process. Therefore, maintaining an optimum level of inventory of raw materials, finished products, and intermediary goods is critical. Enterprises have started adopting many innovative methods in inventory space of late. For instance, many enterprises have started adopting ‘Just-In-Time’ inventory method. Under this approach, corporations maintain only that much inventory as required. So, visibility over the complete inventory becomes essential for smooth production and sales. Blockchain can be used to track inventory levels and optimise inventory management processes. This reduces inventory costs and improves supply chain efficiency.
Sound financial management coupled with compliance:
Supply chain finance is a complex process and runs through several parties. Recording, tracking, and reporting financial transactions across the supply chain are important aspects that an enterprise has to take care of. Blockchain technology enables enterprises to achieve all the desired outcomes in supply chain finance. It provides secure and transparent records of transactions between suppliers, manufacturers, and distributors. Similarly, an enterprise dealing with a global supply chain has to deal with the compliance norms of various nations. Blockchain technology can be used to ensure compliance with regulatory requirements by providing a transparent and auditable record of supply chain processes. It reduces the risk of non-compliance and costs associated with it.
Unlocking efficiency in India’s supply chain with Blockchain:
India’s foreign trade is likely to exceed $1.6 trillion in FY24. While the country’s share of merchandise exports is around 2 per cent of the total exports, services exports are more than 4 per cent. The country is also one of the fastest-growing markets for ecommerce, which is likely to reach $163 billion by 2026. Meanwhile, the manufacturing sector is witnessing rising investment- domestic and global- as China plus one theme picks up momentum. Many manufacturing concerns including Apple are increasing their production footprint in India. Against this backdrop, the scope for improving supply chain management through leveraging blockchain technology is enormous. Technology partners like Dhiway Networks with the right amount of experience and expertise can enable enterprises to devise a robust supply chain management framework and execute it with maximum efficiency.