The supply chain management and logistics companies are evolving with time. The supply chain industry represents a massive market and will get more prominent in the coming years. Currently, it is estimated to generate a revenue of $24.53 billion by 2025 at a CAGR of 9.7% (2018-2025). The supply chain firms are moving from a traditional setup to the integration of IT and technology to their operations to reduce the costs incurred as well as to meet the service demands.
Blockchain technology is believed to have the potential to make data in the supply chain more transparent, immediately available and improve customer experience. Therefore, blockchain offers a solution to overcome the challenges faced by the supply chain industry. To understand how blockchain will impact the supply chain in 2020, let’s first understand the challenges faced by supply chains and how blockchain features can help resolve these impacts.
Challenges Faced by Supply Chains:
With the increase in the scale of commerce, supply chains have become much more complicated and face numerous challenges. The system has become less transparent due to the increase in the complexity of supply chain management. The challenges faced by the system are as follows:
- Customers require Instant gratification and unique demands.
- Supply chain costs have been rising for products and services due to the involvement of intermediaries.
- Lack of traceability and increased counterfeits.
- Quicker marketing for personalized products.
- Handling the shift to and implications of service-based consumption model.
- Ensuring demand is met keeping sustainability and innovation in place.
- Achieving complete visibility in the supply chain.
Why Is Blockchain Technology Crucial For Supply Chain Management Startups?
The features of blockchain make it crucial for every industry. For instance, blockchain facilitates high security as data on the blockchain is immutable, and cannot be tampered. Therefore, when applied in the supply chain, blockchain enhances the transparency and efficiency of supply chains. A complete history of each transaction from manufacturing to sale in the supply chain is recorded with timestamps. This eliminates the risk of human errors and reduces the time and cost involved in the supply chain.
With blockchain, the supply chain process will be streamlined:
- The product quantity and transfer details will be recorded every time they are transferred to a different supply chain node.
- The blockchain ledger keeps a track of all orders, shipment notifications, receipts, and documents.
- Blockchain facilitates storing of RFID, serial numbers and bar codes linked to products.
- Through blockchain, the information shared between vendors and suppliers about the manufacturing, delivery, and maintenance of products will be transparent.
How Blockchain will impact supply chain in 2020?
- Reducing Costs
Blockchain helps removes intermediaries from the supply chain management process, thereby reducing costs such as that related to moving items. The impact of blockchain on the supply chain will result in preventing fraud, counterfeits, and product duplicacy. Moreover, the parties involved can save time by making digital payments on the blockchain and depending less on banks and other payments.
- Increased Trust
The conventional supply-chain process requires a great level of trust between parties so that the authenticity and credibility of the product are maintained. This is where Blockchain enters and instills trust in the system providing stakeholders with records that are time-stamped.
- Enhanced Transparency
Blockchain has brought about complete transparency in the supply chain process all thanks to the immutable ledger due to which tampering of data is not possible. The suppliers and retailers involved in the supply chain can trace back the product to the point of origin and manufacturers can also monitor products to identify and avoid counterfeit products.
- Tracking Source of Origin
Due to the lack of transparency in the supply chain, multinational companies and other large companies sometimes have to face customer grievances which also negatively impacts their brand reputation. This is because their products cannot be traced to the origin to know the authenticity of the products. In 2020, numerous companies will adopt this disruptive technology making supply chain a transparent process with effective record keeping, data sharing, and provenance tracking. Blockchain would enable customers as well as other stakeholders to trace the history of any product to the origin.
Blockchain has been disrupting many industries and is gradually taking over every industry. In a matter of time, blockchain will find its use case for every industry to streamline business processes and promote transparency and decentralization. The key features of blockchain; consensus, security, and immutability are necessary to keep the supply chain process reliable. How blockchain will impact the supply chain in 2020 is yet to be realized, however, blockchain needs to implement Artificial Intelligence, Internet of Things, and Machine Learning to make the supply chain more autonomous and quick.