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Many people initially associate the blockchain with cryptocurrencies. They helped blockchain technology get early recognition. However, there’s now significant interest in how to expand blockchain applications. Here’s how they could support Supply Chain 4.0.
Streamlining the Exchange of Details Between Multiple Parties
Supply chain challenges can quickly mount when companies use extensive networks to get the necessary goods. In the Canadian market. Representatives from Walmart realized that the blockchain could facilitate better invoicing for its hundreds of thousands of shipments.
Supply chain professionals coordinate more than half a million shipments to the brand’s retail stores and distribution centres every year. Additionally, each of the associated invoices contains more than 200 independently calculated data points. They include things like how long carriers stop during their journeys and the storage temperatures for the goods in transit.
Gathering that wealth of information was an error-prone process, with up to 70% of invoices requiring reconciliation. One of the primary pain points resulted since the company utilized multiple systems that did not communicate with each other, requiring users to engage in many manual processes.
The proposed solution was to use the blockchain to create a single source of information for Walmart Canada and its 70 third-party freight carriers. The resulting system protected sensitive information while allowing multiple authorized parties to share it. Every participant also has a unique digital signature used for authentication.
This new approach gathers data at every step along the supply chain. Moreover, since implementing the blockchain, there was a more than 69% reduction in the number of invoices requiring reconciliation.
Enabling Supply Chain Resilience
Many people who are curious about Supply Chain 4.0 want to know how it could make global networks less susceptible to shocks. The COVID-19 pandemic was a stark reminder of how supply chains often have trouble coping with sudden catastrophes.
However, IBM rose to the challenge by making a blockchain solution available to health care organizations that needed alternative options for sourcing critical supplies. Even in less-chaotic scenarios, it takes time for organizations to vet potential suppliers and confirm their inventory levels.
IBM’s blockchain network helped medical organizations identify viable new suppliers. It also flagged instances where recipients had more supplies when needed, allowing them to redirect those goods to other locations that were running short.
Phyllis McCready, vice president and chief procurement officer at Northwell Health, used IBM’s blockchain solution to get products such as personal protective equipment (PPE) during the pandemic. "It is through creating our own group purchasing organizations (GPOs) and supply chain and joining forces with non-traditional suppliers that we have maintained an adequate stockpile of PPE and other equipment and supplies," she said.
Blockchain technology could also aid in the management of the world’s critical resources, such as gas. In one 2020 survey, 58% of respondents in that sector said the pandemic had made investing in digitalization a more urgent need. Using the blockchain in the oil and gas industry is not yet widespread, but that could change as more people realize the necessity of protecting in-demand supplies.
Reducing Counterfeit Products
Even the world’s most enthusiastic blockchain supporters point out that the technology is not foolproof. Flaws in the protocols that control the verification and addition of new transactions to the blockchain can allow hackers to exploit the system. Disrupting normal behaviour becomes costlier as a blockchain is more widely adopted, however. Bitcoin hijackers who tried to take over that cryptocurrency’s blockchain would incur expenses totalling an estimated $260,000 for every hour of the outage.
However, people familiar with the blockchain and Supply Chain 4.0 also typically agree that the way things occur now is not ideal, either, so something must change. Counterfeit products represent one area of concern. Several luxury brands recently collaborated to launch the Aura Blockchain Consortium. It aims to cut down on fake upscale goods.
Each product gets a unique identifier registered on the blockchain after its manufacture. A consumer can enter it on a portal that provides a certificate of ownership and provenance and lets people see the item’s supply chain journey. The resource will also show a product’s warranty and care instructions.
Ongoing efforts also concern curbing counterfeit drugs. People working on one new project intend to use the blockchain’s distributed ledger technology to track what happens to prescription drugs at all points along the supply chain. The hope is that this approach will uncover instances of fake or substandard medicines before they reach consumers and potentially cause harm. Current methods of stopping counterfeit medicines are largely manual and don’t show a complete trail of a product’s origins and movements.
Encouraging the Proper Disposal of Electronic Waste
Smartphones, tablets and other electronics are widespread in our society. However, people don’t often realize that getting rid of those products once they no longer need or want them is not as simple as tossing them in the nearest trash bin. Instead, they need to take them to places that offer assistance with disposing of electronic waste, or e-waste.
A team in India created an incentive-based system for e-waste disposal that tracks a product through its lifecycle via the blockchain. More specifically, the records begin at the point of manufacture then pass down to involve the supplier, retailer, customer and e-waste disposal centre. The system also uses smart contracts, which are blockchain programs that trigger specific actions once stated conditions get fulfilled.
In this instance, a smart contract might help ensure a person gets rewarded for taking their e-waste for proper disposal. The blockchain records also contain details such as the type of device, its manufacture date and the purchase price.
Manufacturers and suppliers could use those details to learn things such as how long a customer typically uses a product before discarding it and whether the costlier items usually last longer than the cheaper ones. These details would be particularly convenient for brands to have if they allow people to trade in old devices for new ones or have refurbishment programs.
There’s not usually enough attention paid to what happens to a product after a customer owns it. However, storing such details on the blockchain could increase the utilization of e-waste management initiatives, making electronics ownership more sustainable.
The Blockchain Is an Important Part of Supply Chain 4.0
These examples show why people should not overlook the blockchain as they assess how best to manage supply chain needs and avoid future shocks. It takes time, financial resources and effort to determine the best ways to use the blockchain for any planned application. However, following through could have long-lasting effects and benefits for everyone involved.