The global supply chain crisis that began in 2021 was a consequence of several factors; it started during some of the worst months of the COVID-19 pandemic, and it has not fully recovered. In the pre-pandemic era, the global logistics industry was going through a period of peak efficiency; back then, the globalized network of production and logistics spread across many nations, and it was highly accessible to many industries. Those were times when we enjoyed predictability despite geopolitical issues such as the 2018 trade wars between China and the United States.
Although the COVID-19 pandemic is mercifully behind us, some of the lingering effects of the supply chain crisis are still being felt. We are still seeing port congestion, microprocessor shortages, logjams, internal issues, and general imbalances. Although there are sustainability and geopolitical factors at play, many other issues can be solved through the continued development of blockchain technology in supply chain.
The immediate goal of blockchain supply chain solutions is to strengthen the networks so that they can withstand major periods of global or regional unrest such as pandemics, armed conflicts, and geopolitical tensions. There is a focus on fixing the damage of the 2021 global supply chain crisis, but there’s also the promise of blockchain transparency, which can increase fairness in global trade, and blockchain traceability, which can improve overall efficiency. With all this in mind, let’s take a look at how a blockchain software development for supply chain can contribute to shaping the future of global trading:
Supply Chain Applications of Blockchain
Here are two current blockchain supply chain use cases with a strong potential of becoming new industry standards of practice:
Sustainable Sourcing
Shoppers are increasingly demanding transparency in sourcing practices, particularly concerning sustainability in all its forms. The fundamentals of blockchain technology are public ledgers that interested parties can access for certification. In the jewelry sector, for example, blockchain applications can track the origin of materials like ethically sourced diamonds or conflict-free minerals, thus empowering buyers to make informed choices while promoting responsible business practices.
Protection Against Counterfeiting
In the cannabis and luxury goods sectors, counterfeiting has always been a major concern. The secure and tamper-proof ledger systems of blockchain networks and applications can verify the authenticity of products at every stage, thus providing consumers with peace of mind and protecting brand reputation. One of the best aspects of this application is that blockchain traceability can be provided to users at all levels; for example, wholesalers of luxury handbags can certify that their products are genuine by tracing their batches from the manufacturing facility to their warehouses. Similarly, shoppers at high-end boutiques can scan a QR code with their smartphones to enjoy this level of blockchain transparency.
Other examples of applications that enable blockchain technology in supply chain include streamlined border trading and tax accounting through smart contracts, food safety through tracking, and pharmaceutical logistics protection against tampering.
The Role of Blockchain in Supply Chain Management
Paper trails and segmented information can only be managed to a certain extent. The struggles of this traditional management system with transparency, traceability, and efficiency came to light during the 2021 crisis. Blockchain supply chain solutions offer universal shared ledger solutions with a high degree of cryptography. Every step of a product’s journey from raw material to manufacturing and from shipping to retailing can be permanently recorded on the blockchain.
When businesses are empowered to track goods in real-time, managers can identify inefficiencies; plus, they can also collaborate more effectively with partners. Then we have security through cryptography, which is the inherent security safeguard of the blockchain world, protecting sensitive data from manipulation or fraud. This helps to build trust among trading partners, thus minimizing disputes and streamlining communications throughout the chain.
What is the Impact of Blockchain Technology on Product Traceability?
We previously mentioned the jewelry sector as an example of blockchain supply chain use cases because the impact has been immediate. The Kimberley Process Certification Scheme (KPCS) to eliminate blood diamonds was drafted in 2003; it chugged along with some improvements enabled by database and cloud computing technologies until the 2018 Emerald World Symposium in Colombia when industry leaders agreed that the time for blockchain development had come. Since then, precious stones such as diamonds have been subject to highly efficient traceability that starts with a unique digital identity on the blockchain ledger.
With blockchain technology, the origin, mining location, cutting details, and ownership history of diamonds are certified, and anyone in the supply chain can access this information. Before 2018, the KPCS was plagued with issues related to the forging of certificates and the breaching of data networks. The cryptographic essence of blockchain technology makes it virtually impossible to fake diamonds or hide their provenance through fabricated certificates.
Blockchain and Supply Chain Transparency
Transparency is a cornerstone of blockchain development in logistics. The positive impact in this regard extends beyond public ledgers; it also promotes efficiency through streamlined data sharing and automated processes. Smart contracts, for example, reduce paperwork and plug the holes created by red tape. This translates to faster processing times, fewer errors, and ultimately, cost savings for businesses.
In the farming and food processing sectors, blockchain transparency has shown to be a driving factor in reducing waste. Some berry farms in California have deployed blockchain applications that integrate QR scanning to get a more detailed picture of consumer trends. This data-gathering method allows farmers to only grow what shoppers are interested in, thus helping to regulate water use through irrigation and only cultivating what is certain to be sold, thus cutting down on waste.
Final Thoughts
In the end, blockchain has the potential to significantly enhance overall efficiency and reduce operational costs for businesses of all sizes. Although we are still years away from the widespread adoption of digital currencies, we should not ignore the potential of blockchain development in the improvement of the global supply chain and its numerous trading networks. The supply chain does not have to be at the complete mercy of geopolitical issues and global health emergencies; thanks to the ongoing integration of blockchain technology, the issues exacerbated during the 2021 crisis can be averted in the future.
