Current Landscape of Supply Chain 2023
According to KPMG report:
Disruptions to supply chain operations will continue in 2023, whether caused by existing or future geopolitical conflicts, inflationary pressures and the recessionary environment, climate change weather events, or other concerns yet to arise.
All of these factors can impact the accessibility of commodities and their smooth flow to their intended destinations. They can lead to delays at ports, reduce the availability of containers and ocean freight, and result in price hikes, among various other problems.
1. Nations are anxious about cooperation
More than six out of ten global enterprises anticipate that geopolitical unrest will negatively influence their supply chains in the next three years.
As a result, governments and business leaders are attempting to establish ‘friend shoring’ connections – trade linkages with like-minded and most likely, geographically adjacent nations (‘nearshoring’) where product supply will be more secure.
2. Cybercriminals are expanding their operations
Almost half of global enterprises see cyber security as a significant operational problem for their supply chains over the next three years.
3. Unstable material access
Raw material costs are cited as the top supply chain challenge by 71% of global enterprises in 2023.
4. The manufacturing footprint is evolving
More than seven out of ten enterprises that announced a manufacturing site transfer between 2018 and 2023 relocated operations to Asia.
5. The retail and distribution supply networks are changing
Meeting consumer expectations for speed of delivery is viewed as a primary driver influencing the structure and flow of supply chains by 67% of firms during the next 12-18 months.
6. Investment in technology is increasing
Six out of every ten companies intend to invest in digital technology to enhance their supply chain procedures, synthesize data more effectively, and strengthen their analytical capabilities.
7. Emissions under Scope 3 scrutinized
53% of businesses want to increase their emphasis on sustainable sourcing.
Scope 3 encompasses indirect emissions from an organization’s upstream and downstream operations.
Other Key Challenges of Supply Chain
Before digging into the possible uses of blockchain in supply chain management, it is crucial to understand some of the issues in this industry.
The supply chain is a complex and diverse network comprising various stakeholders, making it difficult to follow the movement of commodities and discover bottlenecks or inefficiencies in the supply chain. This lack of transparency can result in additional expenditures, delays, and lost income.
Blockchain technology can address this issue by offering a decentralized, secure, and unchangeable ledger that can be used to track the movement of commodities and maintain transparency and traceability across the supply chain.
Blockchain, by offering real-time visibility into supply chain activities, may assist firms in identifying areas for improvement and optimizing their supply chain operations for better efficiency and lower costs.
Supply chain operations may be costly, especially regarding transportation and inventory management. Cost reduction without sacrificing quality or efficiency is a significant challenge for many businesses. Blockchain technology can help businesses save money by streamlining supply chain procedures and removing the need for mediators.
For example, by establishing a decentralized marketplace, blockchain might enable buyers and sellers to deal directly, eliminating the need for intermediaries and minimizing transaction costs.
Furthermore, using smart contracts in blockchain-based supply chain systems can assist in automating numerous supply chain procedures, decreasing delays and inefficiencies, and boosting overall supply chain performance.
Inefficient supply chain processes can result in delays, waste, and lost income. Streamlining supply chain processes is thus a primary focus for many businesses.
Blockchain technology may assist firms in optimizing their supply chain operations by offering real-time visibility into supply chain activities, allowing organizations to spot inefficiencies and areas for development.
Organizations may minimize the time and resources necessary to manage supply chain operations by automating supply chain activities using smart contracts, minimizing delays, and enhancing overall supply chain performance.
Counterfeit items represent a substantial danger to several businesses, notably the pharmaceutical, luxury goods, and technology sectors. Counterfeiting costs businesses money and endangers public health and safety. Blockchain technology can assist in addressing this issue by boosting transparency and traceability in supply chain activities.
Blockchain, by generating a secure and immutable record of every transaction in the supply chain, can assist companies in identifying and eliminating counterfeit items from the supply chain, ensuring that customers get only legitimate and safe products.
Blockchain Technology in Supply Chain Management
A blockchain is a distributed ledger system. Transactions are stored in this ledger as a chain of code blocks. When the blockchain updates, each computer with the same ledger is updated. This implies that the data within a block cannot be modified because each block exists solely in its preceding and following blocks.
As a result, blockchain is a highly verifiable, anti-tampering, transparent technology in business, particularly in supply chain management.
Now we will focus on blockchain technology’s benefits to supply chains.
Here are several important ones:
Because of its integrated and all-encompassing linking of operations, blockchain makes mapping and visualizing supply chain stages simple. This improves the traceability of each component of a supply chain, such as keeping track of supplier information, procurement, and delivery of items.
Another advantage of blockchain is that it fosters trust among the stakeholders involved in a supply chain by allowing open access to crucial data points captured. Its traceability also increases transparency.
Smart contracts, or portions of code, are encapsulated within a single block of a blockchain. When the requirements of the actions are satisfied, smart contracts automatically update the activities. This functionality allows for the replacement of time-consuming manual methods.
Since blockchain is a distributed ledger with several copies, tampering with a given transaction is nearly impossible because one must change all the copies simultaneously. As a result, blockchain adoption in the supply chain is very trustworthy and resistant to fraud.
For transactions to properly follow one another within a supply chain, all parties must agree on the activities. It is impossible to work without consensus. Blockchain is also helpful in achieving and maintaining consensus over the process because all stakeholders know the transactions are automated and legitimate.
Blockchain in Supply Chain Management: Real-World Applications
Several companies have already begun to experiment with blockchain technology in order to improve their supply chain operations.
Some significant examples include:
Walmart is using IBM’s blockchain platform to track pork supplies in China and produce in the U.S. The goal is to improve food safety and traceability.
The shipping giant Maersk uses blockchain to track real-time cargo and shipments. This helps improve supply chain efficiency and reduce fraud and errors.
Nestle is partnering with blockchain firms to track the supply chain of milk from farmers in New Zealand to consumers. This improves food safety and traceability.
4. De Beers
The diamond producer De Beers is using blockchain to track diamonds right from the mine to the retailer. This helps verify the authenticity of diamonds and prevents blood diamonds from entering the supply chain.
Unilever is partnering with blockchain firms to trace the supply chain of tea in Malawi and palm oil in Indonesia. The goal is to improve transparency, traceability, and sustainability across the supply chain.
The French retailer Carrefour uses blockchain to track chicken, milk, and ham to promote food trust and safety. Customers can scan product codes to see the origin and supply chain details.
Pfizer is partnering with blockchain firms to fight counterfeit drugs in the pharmaceutical supply chain. Blockchain is used to track and verify the origin of drugs and improve transparency.
HOW BLOCKCHAIN DEVELOPMENT SERVICES CAN BENEFIT YOUR BUSINESS
Blockchain Limitations in Supply Chain Management
Integration with existing systems
Integrating blockchain technology with current supply chain systems can be difficult and may necessitate extensive IT infrastructure and training expenditures.
Blockchain networks may get more sluggish and inefficient as the number of transactions increases. This may limit the scalability of blockchain-based supply chain solutions.
While blockchain technology might help cut costs in the long term, the initial expenditure necessary to develop a blockchain-based supply chain system can be substantial.
Many businesses have stringent regulatory requirements, and integrating blockchain-based supply chain systems may necessitate substantial work to assure compliance.
While blockchain offers a temper-proof and secure ledger, it also produces a permanent record of all transactions. This can cause privacy problems, especially in areas where secrecy is crucial.
Final Thoughts: The Future of Blockchain in Supply Chains
Consider a scenario where you can replace your supply chain’s existing fragmented tracking with an interoperable solution that can significantly minimize the risk of unethical sourcing, shipping delays, inadequate storage, or ineffective distribution of your goods.
Consider a scenario where you can offer customers and authorities insight into your supply chain and provide indisputable proof that you follow supply chain norms and expectations. Consider a future in which, by solving these issues, you build more trust and efficiency among all players in your supply chain.
Well, blockchain can assist in addressing some of the most pressing issues confronting the supply chain sector today. While certain technological and operational hurdles exist in deploying blockchain solutions, Vrinsoft Technology Pvt Ltd continues collaborating with organizations to overcome these impediments and offer practical solutions required to construct improved supply chains.
Given the current economic climate, corporations and consumers have high expectations of supply chains with fewer risks, greater visibility and transparency, and enhanced trust; Vrinsoft encourages businesses to consider blockchain solutions as a potential antidote to their supply chain challenges.