People cannot improve on what they do not understand or know. This statement applies to shippers as well. While this comparison is most commonly associated with benchmarking, it is also part of the reason why more people in the shipping industry are turning to blockchain for supply chain management (SCM). Blockchain SCM is poised to create links between all existing supply chains, even competitors, which allows supply chain networks to function more efficiently and with greater transparency. As a result, shippers must start thinking about the problems and limitations of today’s supply chains and how blockchain SCM can help.
Why Do Shippers Underestimate Blockchain SCM?
Shippers often underestimate the potential of blockchain SCM because they fail to recognize the problems with today’s supply chains. Historically, supply chains have functioned as relative silos, isolated and local. Supply chain innovation has moved the traditional, small-tote nature to vast empires. Shippers can now send freight across the ocean and use computers to generate, manage and streamline order fulfillment which was a significant boost to the modern economy, but it came with a caveat. Now, no one knows the true nature and scope of products and the origin of manufacturing until the products arrive; and cases still exist where illegal or unethical practices are taking place. Supply chain leaders that do work to maintain compliance could easily be working with dozens of potential suppliers and vendors that do not use ethical or legal business practices. In some areas, labor laws may not even exist, and there is no verifiable way to guarantee the ethical, sustainable sourcing of materials. However, blockchain SCM may help solve these issues, says Bernard Marr of Forbes.
Blockchain SCM Transformation Is Simpler Than It Appears
Blockchain is commonly associated with cryptocurrencies, but the reality of the technology has proven to be hugely beneficial across multiple applications, including those in SCM. Every transaction is recorded with blockchains in “blocks,” and this information is shared via an open-sourced network., While this may sound like a significant security risk, the key lies in how the network, which hosts the blockchain, is created. A blockchain may be public or private, allowing specific groups the ability to view and edit data before it enters the chain. Once registered, the data cannot be changed which means that any suspicious activity can be identified almost immediately. There is not a single authority over the chain, nor does a limit to its length exist. In SCM, this means the chain can be used to track the origination of raw materials and supplies through finished products and via a reverse logistics process. In other words, the blockchain is the ultimate chain of command for modern SCM.
How to Simplify Blockchain SCM for Your Team
It always helps to understand a few terms when considering the use and implementation of any new technology for SCM. For blockchain SCM, its fundamental building blocks and traits, pardon the pun, include:
- Individual blocks of information that are entered into the ledger.
- The network that hosts the ledger, granting or denying access to enter information.
- Data validation tools, which may include data aggregation and cleansing platforms which ensure data is accurate before entry into the blockchain.
- Decentralization, meaning the blockchain is group-controlled and updated by its nodes, a fancy term for members.
A blockchain could be created with the ability to alter information after entry; however, this would not be a true blockchain, it would merely be a tracking resource. Further, since the information builds on itself, it is virtually impossible to alter chain contents, as subsequent entries would contain the original information, similar to composing a thread on an online forum.
Take Time to Learn More About Blockchain SCM Today
The use of blockchain SCM in your organization is something that will have a profound impact on your ability to meet customers’ demands. Companies across the globe are working to develop internal blockchain solutions for supply chain management and soon there will be viable solutions in place for supply chains to stay competitive. Blockchain’s reputation as an incorruptible, distributable resource for all parties in the supply chain makes it the ultimate divinity in the shipping industry. Subsequently, those that do not take the time to understand implications may face the threat of bankruptcy and lost productivity. Don’t get stuck in the mud and fall behind your competitors; the time is now. Learn everything you can about the use of blockchain SCM and its potential applications today.