MARKNetwork Blockchain Use Case: Supply Chain
Is Blockchain a sustainable solution to modern day Supply Chain Challenges?
The current supply chain has become a barrier to better performance. With globalization, supply chains became heavy and complex. Around 21% of supply chain professionals consider supply chain visibility as a massive organizational challenge and there is more to the story. Rising pressure of global competition, increasing complexity of customer behavior and consumer expectations is making supply chain management incredibly difficult.
What adds to the pain is the unethical practices that are difficult to track the way supply chains operate today. Despite the adoption of analytics to mitigate frauds, Supply chains are plagued with this global scourge costing millions of dollars every year and harming corporate reputation.
How does blockchain address the issue?
Blockchain with its inherent record keeping and tracking potential in the digital ledger makes it a technology that supports the existence of a less corruptible and automated supply chain.
Legitimate brands are facing heavy losses in revenues due to counterfeiting. International Chamber of Commerce predicts counterfeiting to reach as high as $2.3 trillion by 2022. The lack of transparency in the supply chain negatively impacts the brand name and revenue losses.
A supply chain management powered by Blockchain makes provenance tracking easier. RFID tags or embedded sensors can be used by the consumers to check the authenticity of products or parts. As these records will be maintained in blockchain making them immutable, the counterfeiting will be eliminated.
Supply chain costs
Blockchain optimizes the supply chain and reduces the overall cost of the supply chain.
While it speeds up the administrative processes and reduces the paper-work, it also eliminates the intermediaries who add to the cost of the supply chain. The monetary dealings are conducted using cryptocurrencies which further reduces the cost of money exchange over traditional exchanges.
Immutable nature of blockchain ensures the supply chain does not suffer any compliance issues. This helps manufacturers and suppliers build trust in trade. As the product records on blockchain cannot be tampered so business will not suffer to misinterpretation of information.
Blockchain makes the supply chain data interoperable among the manufacturers, suppliers, and vendors. All this data ensures the delays and disputes are eliminated that cause supply chain jams as all the data is traceable in real-time. Private Blockchains are customized to meet requirements of particular supply chains.
Let us explore some real-world Blockchain projects to circumvent Supply chain Challenges:
Seafood Supply Chain
The seafood supply chain has always been in the wrong light for the quality issues that arise from improper storage conditions, mislabeling of products and unregulated practices. The trust issues between the customers and vendors are on rising in the seafood industry threating its economic stability.
The alarming contamination figures of seafood supply chain lead World Wildlife Fund(WWF) to turn to blockchain for rescue. A pilot project funded by the Gordon and Betty Moore Foundation was initiated by WWF that tracks fresh and frozen tuna caught in the Western and Central Pacific. The project offers the local fishermen to register their stock of fishes using electronic tags. The data from these tags are tracked on the blockchain. The end consumer can scan the package with a smartphone App and review the entire story of where the fish was caught and how it was transported to their local store. Such blockchain projects will grant maximum transparency to the supply chain.
Pharmaceutical track and trace
Counterfeit medicines are becoming a major risk to human life. According to the latest report, 1 in 10 medical products circulating in low to medium income group countries is counterfeit. The stamp out of fake drugs is becoming of prime importance. To improve the security and traceability of the drugs, the Drug Supply Chain Security Act (DSCSA) mandate came into effect in November 2018. According to the act, each medicine package will be serialized with a unique product identifier.
This is where Blockchain comes into the picture. Drug giants Genentech and Pfizer piloted project MediLedger to manage their drug supply chain to circumvent counterfeiting. As a logical extension of the supply chain, Mediledger project will record the unique serial numbers of each drug. All the data of these drugs will be recorded on the blockchain where the manufacturers, vendors and even the customers will have access to immutable information.
Automotive Supply Chain
The automotive supply chain has turned into a fish market with the disorganized inputs from multiple participants. Part provenance, ownership tracking, time delays, and issues in insurance processing are adding to the costs and complexities of the entire automotive supply chain.The counterfeit spare part market share for the automotive industry is on a meteoritic rise amounting to be billions of dollars.
Blockchain technology in automotive supply chain promises a potent solution to the plaguing issue. Every auto part that enters the supply chain be assigned a unique ID and it will be tracked over the blockchain. These timestamps generated will be immutable thus acting as authenticity tags can be verified at the point of sale. The blockchain projects will also help maintain the ownership history in an untampered manner so that the data authenticity is always maintained creating a customer centric business model.
Food Supply Chain
Today we buy food products that have spanned international borders and exchanged hands between multiple suppliers and retailers. Amidst all these complex consumer demands, the complexity of the food supply chain is increasing. According to a WHO report, around 4.2 million people lose their lives due to contaminated food.
Such reports make the consumers even more vigilant and they demand transparency in the food supply chain.
Walmart has rolled out a blockchain based project for the traceability of their food supply chain. Working with IBM since 2016 on this project, Walmart targets to reduce the spread of diseases due to food-contamination issues. The platform is also focused to avoid any kind of losses to suppliers in case of a product recall.
Blockchain has proved to be quite resourceful to build robust and transparent supply chains. It is becoming increasingly important for the organizations change the way their supply chains work right now to sustain in future. Getting rid of the manual data management, paperwork and centralization of the existing supply chain management are only possible with a permissioned blockchain. At MARKNetwork we are looking at the bigger picture and will help enterprises grow beyond the challenges to reap bigger benefits of blockchain technology with tailored blockchain solutions.
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