Blockchain for the supply chain network provides several features, such as documentation and payment transaction validity and flexibility to trace the source of each asset involved in the blockchain. The product’s status gets updated for everyone in the network within minutes, along with full traceability, thereby eliminating repetition of the inventory. Smart shippers have leveraged the blockchain innovation to increase the profits and strengthen their relationships across their supply chain network. Moreover, the integration of blockchain in supply chain applications, when combined with smart contracts, can automatically execute all the transactions with the help of an autonomous system, which is trusted by all the signatories involved in the network.
Blockchain, a distributed ledger technology, records transactions in a series of blocks. The decentralized architecture of the ledger is secure, as each new block in the chain is linked to the previous blocks, thereby eliminating tempering.
Blockchain impacts supply chain management
Supply chain, often an elongated and complicated network, may require several days to complete a transaction between manufacturers, producers, and end-consumers. The involvement of third parties to handle contracts results in high cost for consumer goods, industrial equipment, and digital offerings and more. Blockchain can help fill this gap, with a high potential to enhance product traceability, reduce fraud, reduce duplication of inventory goods, and minimize the traditional paperwork that often delays delivery and payment processing.
Blockchain empowers enterprises to do things faster with greater trust and results in reduced friction and fewer inefficiencies in the supply network. As a result, operating cost and complexities are minimized in cross-enterprise business processes. With the changing digital trends, the need for data transparency and reduced complexities in the supply chain are becoming essential, thereby demanding a higher adoption of the blockchain. Using a blockchain provides several goods and process management options to supply chain management companies. Entries into a blockchain can be used to queue up events within a supply chain network, which includes allocating newly arrived goods to different shipping containers at a port.
The figure given below represents MarketsandMarkets (MnM) estimates for the year 2017 and 2022, with the Compound Annual Growth Rate (CAGR) of blockchain for supply chain applications.
MnM’s new research study on “Blockchain Market” forecasts the growth of private, public, and permissioned blockchain across various industry verticals in the coming years. According to the analysis, the blockchain supply chain market is expected to grow from $32.2 million in 2017 to $618.5 million by 2022, at a CAGR of more than 80% during the forecast period, 2017 to 2022. The healthcare and life sciences and retail and e-commerce verticals are expected to witness high growth rates in the blockchain for supply chain market during the forecast period. Blockchain integration in the retail and e-commerce sector eliminates the need for third-party payment processors, thereby meeting the increasing customers’ demand for product authenticity.
Big retailers adopt blockchain for tsupply chain
Companies such as IBM and Factom offer solutions that utilize blockchain in supply chain management. IBM has undertaken partnership as its major development strategy to create a leading market edge. Most recently, IBM entered a major blockchain collaboration with a group of leading retailers and food companies, including Nestle and Walmart, to identify the critical areas across the food supply chain, which would benefit from blockchain. IBM Blockchain provides all the participants in the global food supply chain a permissioned access to information regarding the origin and state of the food for their transactions, as one example. This would allow the members of the ecosystem to trace contaminated products and ensure their safe removal from store shelves, thereby maintaining quality. Other verticals can point to similar use cases.
Blockchain has the potential to reduce supply chain gaps, promote more cost-efficient transactions, and facilitate a continued growth in the world trade. Blockchain integration helps reduce forced labor and illegal sourcing of materials and addresses other such issues. The impact of blockchain is enormous in the supply chain management; it is likely to witness an exponential growth across multiple industry verticals by the end of 2022. Consiering the continuous innovations in the market, we expect that blockchain will gain the attention of the other players and witness a full-scale adoption.