Blockchain In Supply Chain: Enhancing Transparency And Efficiency

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Current supply chain landscape

Until COVID struck in 2020, consumer expectations revolved around a two-hour delivery model. But when the pandemic disrupted that model, consumers soon discovered the implications of the term “supply chain” as they confronted delays in the delivery of household goods—everything from toilet paper, mobile phones, and entertainment equipment to gaming consoles and home office furniture. With knowledge comes new expectations. And now both consumers and organizations alike are looking to technology to enhance supply chains and alleviate, or at least mitigate, any bottlenecks in the system. Nevertheless, technology is no silver bullet. Supply chains are often hostage to a host of factors including geopolitical tensions, cyberattacks, inflation, droughts that disrupt shipping by lowering water levels, and critical product stockouts, as well as the many unforeseen effects of global warming.

Given all these disruptions, many companies, and those responsible for supply chain effectiveness, are rethinking their lean and just-in-time planning as well as issues related to source, make, deliver, and return processes and systems. Moreover, supply chain executives are increasingly required to predict, and proactively mitigate, vulnerabilities in the supply chain. For that reason, these executives are focusing their strategic investments on three key effectiveness drivers:1

1. Predicting supply chain risk 2. Enabling environmental, social, and governance (ESG) tracking through supply chain traceability 3. Enhancing trust in a complex, multi-stakeholder environment

Enhancing these three drivers can help executives and their enterprises achieve transparency, track provenance and compliance, and enhance brand loyalty. For many organizations seeking to master their supply chains, this is where blockchain enters the picture. Blockchain is a record of transaction data that relies on a shared ledger. This ledger is inherently tamper-evident and provides a trusted shared and reliable way to record, validate, and view transactions across a complex system with many participants, some of whom may not inherently trust each other.

In the past, supply chain leaders had to rely on redundancy to mitigate supply chain disruptions. While some redundancy may always be necessary—especially for critical materials—solutions like blockchain can help companies proactively detect and mitigate supply chain risks before any severe impact occurs. For example, to increase transparency and traceability, companies in resource-intensive industries have turned to blockchain solutions to help control Scope 3 emissions.2 Finally, because global supply chains involve many discrete entities that are frequently separated by several degrees in terms of their interests, the quality and opacity of information invariably degrades trust among parties. Technologies like blockchain can help offset such detrimental effects by ensuring the authenticity of information and transparency during upstream transactions.

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