With the current global lockdown affecting supply chain visibility, blockchain technology once again presents itself as being primed for more broad-based utilization in traceability, shipments, and other critical aspects of supply chain management (SCM). Here are three ways the novel technology can prevent disruptions in supply chains across various industries during a global pandemic.
SCM Digitization via Blockchain Technology
Periods of disruption like the current COVID-19 pandemic affect supply chain visibility which is mostly felt by tier 2 and tier 3 suppliers. These vendors lacking in the technical advancements of their tier 1 counterparts hardly have the logistical knowhow to cope with critical chain disruptions.
Blockchain utilization in SCM can ensure a pivot towards the digitization of supply chain records like “Bill of Lading.” According to a recent essay by the World Economic Forum (WEF), supply chain digitization would eliminate disruptions caused by operations that rely heavily on “wet signatures.”
An excerpt from the WEF essay reads:
“Digitizing, then, is not simply a matter of cost, but primarily of visibility and managing supply chain risk. To limit the impact of points of failure in the value chain, it is important to make data available through digital means. In the current COVID-19 pandemic, governments and businesses with strong digital infrastructure and enabling regulations such e-signature and e-transactions laws, are dealing with the supply chain disruptions much better than those without.”
DLT Security Can Ensure Robust Data Privacy Architecture
With digitization comes the need for robust security to ensure the fidelity of stored data in a supply chain network. Suppliers and vendors, in general, need to maintain their competitive advantage over other fellow market participants.
Thus, information regarding pricing, raw material sourcing, and other operational data must be secured in a tamper-proof network. blockchains with robust permission architecture ensure that participants can audit all information-sharing protocols and determining the degree to which certain industry actors can access their data through means like “read-only” permissions etc.
Democratizing the Full SCM Spectrum
The current architecture of global supply chains for industries like automobiles and food tends to favor the major players — tier 1 suppliers, original equipment manufacturers (OEM), etc. As such, it is common to see the supply of raw materials sourced illegally because traceability and provenance infrastructure isn’t up to scratch.
Indeed, on multiple occasions, several global giants like Nestle, BMW, Alibaba, Boeing, and Mercedez-Benz among others, are deploying blockchain technology to improve traceability and stop the proliferation of illegally sourced production materials.
While the current global health crisis might require various degrees of isolation and quarantine, blockchain technology can provide the base-layer for which SCM continues which in turn helps to keep the production of useful materials on track.
By leveraging blockchain technology, all participants across both the supply and demand ends of the SCM spectrum can ensure that global supply chains become more resilient to whatever systemic shocks may emerge in the future.