Digital Supply Chain Is the Future
As the supply chain for the manufacturing industry becomes increasingly global, it’s also becoming increasingly complex. Even before the COVID-19 pandemic, many manufacturers and distributors were adopting digital solutions — particularly blockchain — to improve the visibility and traceability of raw materials and goods through the supply chain. These upgrades helped enhance transparency, security, quality and safety, and reduced the risk of fraud. Disruption of the global supply chain during the pandemic highlighted the need to gain greater control over the process.
What is Blockchain?
Simply put, blockchain — the technology behind Bitcoin and other decentralized cryptocurrencies — is a distributed, shared database (or ledger). It’s highly secure because it’s continuously copied and synchronized among thousands of computers (called nodes) maintained by third parties.
The lack of centralized storage and control — combined with a rigorous third-party verification process — makes the ledger extremely resistant to mistakes, tampering or fraud. Transactions can’t be added to the ledger until they’re verified through established consensus protocols, which means that someone who wants to falsify information would have to tamper with all of the copies simultaneously.
What Are the Benefits?
Combined with bar codes, sensors or digital tags affixed to physical items, blockchain can be used to document and track each step in the supply chain in real time. This provides protection against fraud and counterfeiting by accurately and transparently tracking the movement of all materials and products from one party to the next throughout the process. It also gives companies the ability to identify and respond to supply chain risks and disruptions in real time.
Other potential benefits include:
Improved traceability of products and materials throughout their journey. For example, blockchain enables food manufacturers and distributors to quickly trace tainted produce back to the farm where it originated, allowing them to handle product recalls much more effectively and efficiently.
Enhanced quality control. For instance, some hospitals are using blockchain to track the temperature of COVID-19 vaccines that are required to be stored in ultra-cold conditions. Sensors monitor the temperature where vaccines are being stored or transported and transmit this data via the cloud to a blockchain network.
Blockchain may not be quite ready for prime time, especially among smaller manufacturing and distribution businesses. But given the many significant benefits of this technology, it’s likely to provide users with a big competitive advantage in the near future.