Blockchain was initially devised as a peer-to-peer electronic cash system, but its far-reaching capabilities make it ideal for supply chains too. Blockchain is particularly relevant in global trade, where transactions are often slow and inefficient due to the time taken to confirm them across multiple jurisdictions. Blockchain could be the nudge needed for Blockchain to become commonplace and revolutionise how we do international business.
Ledgers can give buyers a more secure, resilient and efficient connection to suppliers on a global scale.
The pandemic has stirred how global supply chains operate; it could be the nudge needed for Blockchain to become commonplace and revolutionise how we do international business.
Blockchain can improve global supply chains, and COVID-19 is likely to propel this technology into international adoption. With global air travel at all-time lows due to quarantines, lockdowns and travel restrictions, buyers find it increasingly difficult to keep tabs on their suppliers. Especially during a crisis such as this pandemic, buyers must know as soon as possible when there may be a problem with their supplier and if they should begin looking for new ones.
So what is the issue? The main factor that is affecting global supply chains is that many companies still deal with paper processes. Logistics and supply chain companies use paper processes for invoicing, packing lists, detailed order requirements and price lists. This business style helps maintain confidentiality, - which is essential as these companies prefer not to reveal much of this information to their customers.
How can Blockchain help? Blockchain will streamline this process, maintain security and revolutionise the processes. Suppliers can reveal information to customers only when strict, pre-determined parameters are met - maintaining control over their internal data
- Streamlines and simplifies processes, reducing the need to employ costly intermediaries. This will save companies money in the long run because it eliminates many manual labour and expensive intermediaries that are not needed when there is transparency in supply chains - cutting down on costs. The blockchain ledger would be an immutable audit trail that could reduce disputes between suppliers, buyers, regulators and other stakeholders by providing irrefutable proof and providing complete visibility into transaction history.
- Security from hackers or internal theft issues with this technology being much more difficult to hack than paper ledgers due to its decentralised nature; data cannot be altered retrospectively without all nodes agreeing so security breaches can be immediately
Why are we not doing this yet? Blockchain smart contracts have been around for some time now, but there has never been an impact so significant on the global supply chain like COVID-19 before for businesses to move away from their tried paper processes. Hopefully, this pandemic will propel these businesses in rethinking their stale, slow and archaic processes.
Now, more than ever before, Blockchain should be seen as a way to connect buyers with suppliers most efficiently and securely possible. It is time for supply chain professionals to investigate how Blockchain can help them work smarter by looking at new ways of operating that are not reliant on paper-based processes that are outdated and inefficient.