Those familiar with the supply chain management industry know that it faces some major efficiency problems — massive amounts of data, siloed information, and inconsistent formatting, to name just a few. In an industry tasked with handling so much data, making any real workflow change seems like a task for only the brave and endlessly patient. But, as Forbes reports, blockchain technology has shown major promise in addressing those long-standing industry challenges.
As new uses for blockchain are introduced into the finance industry, other industries (including supply chain management) are taking note of blockchain’s ability to tackle issues around efficiency, information sharing, and traceability.
Supply chain management involves large, complex data sets — and working with them can be unwieldy. Smart contracts are pieces of code that operate on a block of blockchain and automate actions once specified conditions are met. Blockchain could allow the creation of tamper-proof smart contracts and the automation of everything from shipping notifications to inventory management.
But implementing blockchain does not come without its own set of difficulties. Apart from regulatory issues and other external factors, the path to increased efficiency often includes a transition period as employees grow accustomed to working with the new technology. Forbes advises that companies implementing blockchain start small and expand from there.
In any industry, siloed information can be an efficiency drain. But within supply chain management, siloed information can also expose an organization to risk of tampering. Blockchain makes it easier for the right people to access the right data and helps protect the flow of information from those who shouldn’t have access.
Blockchain technology allows the information at each step of the supply chain to be logged into a secure public database, which no one can modify without it becoming immediately apparent. If something does go wrong, discovering when and where it happened is easy. The transparency of the process also benefits customers, and farmers can have information and visibility on where their product ends up.
Blockchain isn’t a blanket solution for all problems in supply chain management. For one, blockchain solutions need scale and a large group of active users. The network effect can impact blockchain applications, especially since so many different entities are involved. And in order for blockchain to be useful, a company also needs agreed-upon standards and technical talent to keep the blockchain running smoothly.
Despite the challenges, though, the solutions that blockchain can provide — decentralization, transparency, and traceability — are worth investing in. Problems that used to seem impossible to solve can now be addressed systematically across a wide range of industries. From pharmaceuticals to finance to consumer packaged goods, lots of organizations can benefit from the security and efficiency of blockchain solutions.