Blockchain will transform Supply Chain & Logistics
How Blockchain Will Transform the Supply Chain and Logistics Industry
A supply chain today, with all the links to create and distribute goods, is extraordinarily complex to manage. Depending on the product, the supply chain can involve lots of layers, multiple geographical (international) locations, a great number of invoices and payments.
This also having several individuals and entities involved, and extend over months of time. Due to the intricacy and lack of transparency of our current supply chains, blockchain is seen as a preferred solution that would greatly transform the supply chain and logistics industry. This article will look at the cracks in the supply chain, how blockchain and the Vottun project could help, and a few examples of blockchain for supply chains.
The Crack in the Supply Chain
Over a hundred years ago, supply chains were relatively simple because commerce was local. As time went on, supply chains became increasingly complex. Throughout the history of supply chains, different innovations have occurred such as the shift to haul freight via trucks rather than rail or the arrival of personal computers in the 1980s that led to dramatic shifts in supply chain management. Manufacturing has since been globalized, with a bulk of the work being done in China, and this has brought about complexity in the supply chain.
Customers and buyers are finding it very difficult to ascertain the value of products because of the lack of transparency found in the supply chain. It is also immensely difficult to investigate supply chains when there are reports or suspicion of illegal or unethical practices. They can also be highly inefficient as vendors and suppliers try to connect the dots on who needs what, when and how.
Blockchain and its Usefulness to the Supply Chain
The most prominent use of the blockchain might be in the cryptocurrency Bitcoin, but its usefulness goes beyond this, as it is a distributed ledger with many applications that can be used for any exchange, agreements/contracts, tracking, and payment. The Blockchain is very transparent, as every transaction is recorded on a block and across multiple copies of the ledger that are distributed over many nodes. It is also very secure because every block links to the one before it and after it. The blockchain has no central authority and it is very efficient and scalable..
Essentially, blockchain can increase the efficiency and transparency of supply chains and impact everything, from warehousing to delivery to payment, positively. Chain of command is essential for many things, and blockchain has the chain of command built in. Blockchain provides reliability and integrity, which are important ingredients in the supply chain.
With the blockchain, there is no dispute when it comes to transactions, as entities on the chain have the same version of the ledger and the chain of ownership for an asset is visible to everyone on the blockchain. One of the things that make the blockchain unique is that records cannot be erased, and this is important for a transparent supply on the blockchain.
Vottun as A Means of Transparency for the Supply Chain and General Logistics
The supply chain is plagued with inaccuracies and lack of transparency. As discussed earlier, the supply chain is very intricate and highly inefficient. The Vottun blockchain for supply chain management project, however, provides transparency, efficiency, and trust, as it seeks to replace the poorly secured documentation standard with a robust blockchain-based management paradigm. Vottun leverages on the power of the immutable ledger to provide trusted-tracking services for products along the supply chain. One of the unique attributes of Vottun is its use of smart contract protocols. Smart contracts can be used to govern the entire supply chain process using intuitive algorithms that control, track, and execute all the steps in the process.
At each process in the supply chain, certificates that accompany production, inspection, and delivery are issued. The farmer is given a certificate; the supplier is given his certificate; the retailer is also issued his certificate. These certificates issued at different stages show that food products have been inspected from farm to shelf, and are a seal of quality and adherence to statutory standards and regulations. With Vottun, consumers can ascertain the value of a product by simply using their phones to scan the barcode on the food products, and the history of food products and all related certificates for the entire supply chain will be displayed. Certificates cannot be tampered with or forged.
Examples of Blockchain Being Used in Supply Chains Today
Blockchain is very convenient for a globalized supply chain, as it allows for the transfer of funds anywhere in the world, without the use of a traditional bank. Tomcar, an Australian vehicle manufacturer, pays its suppliers through Bitcoin.
It is vital to have solid records in the food industry, in order to trace each product to its source. Walmart, for example, uses blockchain to keep track of its pork it sources to China and the blockchain records where each piece of meat came from, is processed, stored, and its sell-by-date. Big food companies like Unilever, Nestle, Tyson, and Dole, also use blockchain for similar purposes.
BHP Hilton, the world’s largest mining firm, made an announcement that blockchain would be used to track and record data better throughout the mining process with its vendors. It will not only increase efficiency internally, it will also allow the company to have more effective communication with its partners.
Blockchain’s transparency is important because it allows the consumers know if they are supporting companies who share the same values of environmental stewardship and sustainable manufacturing. This is what the project Provenance, hopes to provide with its blockchain technology record of transparency.
De Beers, an international diamond giant, uses blockchain to track stones from the point where they are mined, to the point when they are sold to consumers. This way, the company avoids conflicts or “blood diamonds” and guarantees consumers that they are buying a genuine diamond.
Cloud Logistics and many other supply chain startups saw an opportunity to improve efficiencies and reduce costs for the massive supply chain industry by providing blockchain-enabled supply chain solutions. More supply chains will definitely jump on the train as they realize the potential and demand for blockchain-enabled solutions to transform the supply chain and logistics industry.