Do you know the current market value of the global supply chain management market? It was valued at 15.85 billion U.S. dollars in 2020, and it is projected to reach nearly 31 billion U.S. dollars by 2026.
But it's also true that supply chain management is a complicated and difficult process that involves many people at once, works in many places, and involves billions of transactions. And because it is such a big industry, it needs coordination, trust, and openness to make sure that the products and services customers get are safe, effective, and of good quality.
However, the issue is that the previous supply chain management methods frequently suffered from:
Lack of visibility and traceability of the products and their origins
High costs and risks of intermediaries, frauds, and errors
Inefficiencies and delays due to manual processes and paperwork
Vulnerability to cyberattacks and data breaches
And these problems are big enough to make customers unhappy, hurt a company's reputation, lead to fines from the government, and cause supply chain industry leaders to lose money.
Fortunately, there is a technology that can revolutionize the way supply chain management is done: blockchain. For those who don’t know, blockchain is a distributed ledger technology that enables secure and transparent transactions among multiple parties without the need for a central authority. It can store and verify data in an immutable and tamper-proof way, creating a single source of truth for the entire supply chain.
Blockchain has the power to make supply chain management work better. And here are five ways that can happen:
1. Decentralization for Improved Supply Chain Efficiency
By 2023, blockchain will be able to move and track goods and services worth $2 trillion a year, according to NetSuite. So, in this way, blockchain eliminates the need for intermediaries such as brokers, agents, or banks that can add costs and risks to the supply chain. Instead, it allows direct peer-to-peer transactions among the supply chain participants, such as suppliers, manufacturers, distributors, retailers, and customers. which, in the long term, will reduce the transaction fees, delays, and errors that can occur in traditional supply chain systems.
2. Increased Transparency with Blockchain Technology
According to GetSmarter, the estimated boost to global GDP from blockchain's ability to verify product origin is $962 billion. We are all aware that product verification ensures product traceability, and blockchain provides full visibility and traceability of the products and their origins throughout the supply chain. It is clear that it keeps track of every product transaction and movement on a shared ledger that all authorized parties can access, allowing for real-time tracking and verification of the product's quality, quantity, location, condition, and standards.
3. Smart Contracts for Streamlined Operations
30% of manufacturing companies are using blockchain or plan to do so within 12 months, according to a survey by IDC. With the power of smart contracts, which are self-executing agreements that are triggered by predefined conditions, the industry can automate various processes and tasks in the supply chain, such as ordering, invoicing, payment, delivery, inspection, and warranty. This improves the speed, accuracy, and efficiency of supply chain operations and reduces the disputes and conflicts that can arise from human errors or misinterpretations.
4. Improved product safety and quality
If we talk about the IoT device alone, 50% of devices will use blockchain for security purposes by 2023, according to a report by Gartner, and when it comes to the supply chain, it's clear that a lot of IoT devices will be used. So, blockchain also enhances the security and privacy of the data and transactions in the supply chain. It uses cryptography and consensus mechanisms to ensure that only authorized parties can access and modify the data on the ledger and also prevent any unauthorized changes or deletions of the data by creating a permanent record of every transaction.
5. Encourage innovation.
80% of supply chain leaders say that digital transformation will have a significant impact on their supply chains by 2023, according to a report by EY. Blockchain opens new opportunities for innovation and collaboration in the supply chain. It enables the integration of other technologies such as the Internet of Things (IoT), artificial intelligence (AI), cloud computing, big data analytics, and 5G to create more value-added services and solutions for customers and fosters new business models and partnerships among the supply chain stakeholders to create more competitive advantages and customer loyalty.
Some of the benefits of blockchain for supply chain management are:
1. Single source of truth
According to a report by Capgemini, using blockchain for procurement can cut down on 40% of supply chain costs. And it can be because blockchain provides a shared ledger that records every transaction and movement of the products on the supply chain. By doing this, all authorized parties will have access to and can verify a single source of truth. This reduces the need for intermediaries, reconciliations, and disputes that can arise from inconsistent or inaccurate data.
2. Verified transactions
It enables secure and transparent transactions among the supply chain participants without the need for a central authority or a third party. This reduces the transaction fees, delays, and risks that can occur in traditional supply chain systems.
3. Traceability with permanence
20% of top global grocers will use blockchain for food safety and traceability by 2023, according to a report by Gartner. One main reason is, blockchain ensures full visibility and traceability of the products and their origins throughout the supply chain. It also creates a permanent and immutable record of every transaction that cannot be altered or deleted. This enhances the quality, safety, and compliance of the products and their sources.
4. Supply chain accuracy
$2 trillion worth of goods and services annually will be supported by blockchain in terms of movement and tracking by 2023. It will happen because blockchain can reduce human errors and inefficiencies that can affect supply chain operations. It also enables the automation and optimization of various processes and tasks by using smart contracts. This improves the speed, accuracy, and efficiency of supply chain operations.
Blockchain technology is transforming the supply chain industry and enabling it to meet the challenges of the 21st century. By providing decentralization, transparency, smart contracts, security, and innovation, blockchain is revolutionizing the way supply chain management is done. With blockchain, supply chain leaders can ensure that their systems are more efficient, effective, and secure and that they deliver products and services of higher quality, safety, and sustainability.
If you are a supply chain industry leader who wants to leverage blockchain to optimize your supply chain management in 2023, contact us today. We are a team of experts who can help you design and implement a customized blockchain solution for your specific needs and goals.