Blockchain is a distributed database that holds records of digital data or events in a way that makes them tamper-resistant. While many users may access, inspect, or add to the data, they can’t change or delete it. Since there is no room for modifications, it establishes a permanent and public information trail, or chain, of transactions. Blockchain is not a new technological innovation. It is ‘old wine in a new bottle’. It is a coalition of three existing technologies- the internet, private key cryptography and a protocol governing incentivization.
Recently, I came across an article in ‘BusinessLine’ regarding Walmart’s pilot project of implementing blockchain technology for end-to-end traceability of shrimp sourced from Andhra Pradesh and shipped to select Sam’s Club locations in the US. This pilot project will help farmers to strengthen the shrimp supply chain and establish customer trust.
The new technology will enable Walmart and consumers to track the exact sourcing location of the product by scanning the barcode and thus, enhancing the traceability and transparency for the consumers. Walmart’s move will improve food safety in India, one of the biggest issues Indian food exports have faced in the recent past.
In 2017, Walmart piloted the use of blockchain technology for sourcing mangoes in the US. They were able to reduce the tracking time from seven days to merely two seconds using blockchain technology.
I always revered the supply chain management of an organisation. Supply chain and logistics of an organisation are just like the circulatory system of our body which carries oxygen and nutrients to other segments of our body for healthy functioning.
A supply chain can be defined as the network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product or service, from procuring raw materials to delivery of the final product or service to the ultimate customer. Any bottlenecks in the supply chain will delay the delivery of the final product to the customers and the business organisation may lose its customers to its competitors. The innate complexity and lack of transparency in the globalised supply chains call for innovation and reformation.
It is almost impossible to keep track of every element involved in the supply chain of business organisations. This leads to a lack of transparency and the company might lose its brand image. A blockchain-based supply chain makes record keeping and provenance tracking easier by providing access to product information with the help of embedded sensors and RFID tags. Moreover, it also allows for detecting fraudulent activities in any segment of the supply chain.
Transparency and the immutable nature of blockchain establish trust between the firm and the clientele and also other agents involved in the logistics. This will provide a competitive edge to the organisation at an industry level.
Cost reduction is the prime objective of organisations to invest in new technology. According to a survey of supply chain workers conducted by APQC and the Digital Supply Chain Institute (DSCI), more than one-third of people cited reduction of costs as the topmost benefit of the application of Blockchain in supply chain management. Blockchain technology reduces cost by increasing the pace of administrative processes in the supply chain, slashing out redundant costs and eliminating middlemen and intermediaries in the supply chain. It increases efficiency and the risk of losing track of the product by maintaining an accurate and immaculate ledger.
We all are aware of the saying, ‘Information is wealth’. Blockchain technology allows data to be more interoperable. It allows companies to share information and data with manufacturers, suppliers and vendors. Such data helps business organisations to understand and improve their performance through better deployment of resources. At the same time, data security and integrity are maintained. Other miscellaneous benefits of blockchain are better management of inventory and faster identification of the epicentre of an issue. Application of Blockchain may prove to be highly effective in improving the transparency of coffee, drugs and pharmaceuticals and automotive supply chains that face complex issues.
Blockchain is another wondrous contribution of technology which aids business by recording, tracking and verifying anything that holds value. Like any other technological innovation, blockchain has its own set of limitations. Even though blockchain technology claims complete security, there is a possibility of disruption of the network. The immutable nature of the blockchain technology may not be favourable at all circumstances. To reflect relevant and pertinent changes, we should abandon the current database and set up a new blockchain. Blockchain ledgers can inflate over time creating storage issues. The bitcoin blockchain currently requires around 200GB of storage.
The Business environment consisting of the economic, social, political, technological, environmental and legal factors provide both opportunities and threats to companies from time to time. Blockchain is one such opportunity. It will assist organisations to create a robust and transparent supply chain with end to end communication. In this article, we have isolated our discussion to the application of blockchain in the supply chain of the organisations. Its usefulness can also be extended to medical record-keeping, Wills and inheritances, equity trading, money transfers, weapon tracking and more on the list. Interested students may explore further.