Are you interested in leveraging the latest technology to improve business operations? If so, then you won't want to pass up learning about blockchain technology, an important aspect of supply chain management that aims to make transactions and product movements readily traceable and more transparent.
And for those considering a career in supply chain management or a related field, blockchain technology is the way of the future. With a better understanding of blockchain practical applications beyond cryptocurrency, you may be able to more confidently apply this innovative technology in your own future work.
Although you may often hear about blockchain technology being used to create a digital ledger for crypto transactions, it has many other business applications to consider. It can be used, for example, to protect sensitive healthcare data or even create tamper-proof voting systems. It can enable international payments through cross-border settlements and even protect against cyber attacks.
In supply chain management specifically, blockchain technology offers:
Although blockchain technology has long been used to manage digital currency transactions, it's time that we look past that single use and explore the many potential applications that this technology has to offer in supply chain management. By implementing these technologies, businesses may be able to improve security, protect against fraud, enhance compliance, and streamline operations.
One of the many benefits of blockchain technology in supply chain management is its ability to improve transparency. This is done through built-in anti-counterfeiting measures and cold-chain controls for quality and safety.
With its distributed ledger, transactions are 100% tamperproof, as edits cannot be made without approval by the entire network. This, in turn, can reduce the likelihood of counterfeiting and other issues. Meanwhile, with secure product linking through QR codes, RFID chips, or NFC tags, businesses can be sure that blockchain records always reflect each product.
Likewise, blockchain technology can improve quality, safety, and cold-chain controls through its transparency and traceability features (such as its decentralized and shared ledger), and its tamper-proof nature.
Meanwhile, because every step of the chain is recorded on said ledger, this creates an in-depth level of cold chain monitoring that can make it easier to pinpoint issues and track products as they move along the supply chain.
From a quality and safety standpoint, blockchain helps to build consumer trust by allowing for more effective recall management and improved product integrity.
Compliance is another important issue in supply chain management that a GDPR compliant blockchain can assist with.
When it comes to record-keeping, blockchain technology ensures that when data is added to a ledger, it cannot be altered or deleted in any way. This enables the creation of accurate and transparent business records, which also generate compliant audit trails. And because blockchain technology can, in some cases, offer automated compliance features, it can help reduce the risk of error and keep businesses in compliance at all times.
Blockchain technology also offers sector snapshots, or a record of the ledger at a specific point in time. This type of frozen record makes it easy to see all accounts that were active on the network at that point, any digital assets, and the current status of any contracts. This feature can also improve transparency while helping users maintain compliance.
Another important feature of blockchain technology as it relates to supply chain management is smart contracts for business, which are self-executing programs that automatically enforce coded contract terms when certain conditions are not being met.
Because smart contracts are automated, this allows for faster and more efficient processes that require less in the way of human intervention. This can streamline operations and make them more efficient overall.
Because everything is handled automatically with less need for human intervention, this can also lead to fewer disputes surrounding contract terms. As a result, businesses may be able to avoid having to call intermediaries to handle disputes, which can save money and keep things running as smoothly as possible.
Blockchain technology in supply chain management also offers unrivaled privacy and access control, especially when you look at such specific features as verifiable credentials, a blockchain audit trail, and zero-knowledge proofs.
For starters, blockchain technology relies on a decentralized identifier (DID) system and verifiable credentials as a means of improving privacy and identity. Specifically, these identifiers are linked to cryptographic keys, which allow users to prove their credentials with ease and accuracy. Meanwhile, verifiable credentials are tamper-resistant and can be stored in a digital wallet for easy access.
When a blockchain network is established, its users also have the ability to create their own governance rules and policies. This includes rules regarding how new policies will be implemented (such as by voting) and the governance mechanisms that will be in place. The policy and governance rules of a blockchain network can further enhance privacy and access control, creating more secure networks.
One of the most common questions people have about blockchain networks is how easily they can be integrated into existing systems and adopted by users. Fortunately, these systems are usually easy to connect to existing systems and are relatively user-friendly, even for those who may not be familiar with blockchain technology.
There are many existing systems that blockchain networks may need to be connected to, including internet of things (IoT) networks and enterprise blockchain solutions (such as ERPs and CRMs). Implementing this should be relatively straightforward, provided the use case is clearly defined and the appropriate blockchain platform is selected.
This technology also allows for blockchain interoperability, or the ability to communicate with other blockchain networks and exchange assets. Through bridges, sidechains, cross-chain platforms, and standardized protocols (including a universal language for data formats), asset transfers and other critical supply chain processes are streamlined.
Supply chain managers thinking about using a blockchain network to start reaping the benefits should keep some things in mind before making a decision. Specifically, they'll want to consider the unique key performance indicators (KPIs) and value levels to measure, and potential risks and mitigations to plan for.
Return on investment is perhaps the most important KPI of any blockchain network, but it can be difficult to measure until you have some hard data to review. In general, however, blockchain systems can lower administrative costs for supply chain businesses while enhancing operational efficiency and improving security.
Some other KPIs and value levels that may be worth measuring include:
Of course, implementing any new system comes with some inherent risks and challenges, which is why supply chain managers should be aware of potential risks and how to mitigate them ahead of time.
One of the most notable risks is that of scalability limitations, which may create issues for businesses that need to process a high volume of transactions in a short period of time. To mitigate this, supply chain managers are encouraged to choose a blockchain network that gives them plenty of room to grow and scale as needed.
Supply chain managers preparing to implement blockchain technology should also be prepared with a change management adoption plan or roadmap, with steps that begin with choosing the right use case,
What is your end-goal for implementing blockchain technology? Perhaps you're looking to enhance regulatory compliance and transparency, or maybe you're more focused on efficiency and ROI. Either way, once you have a better idea of what you're hoping to get out of the technology, you may be in a better place to decide on the right use case for your platform.
Next, it's time to create a plan for implementing your blockchain technology. Rather than pushing it company-wide right from the start, however, you might consider running a smaller pilot test of the network first. This will allow you to more readily pinpoint what works in your implementation plans versus which areas may still need some refinement.
As you implement a blockchain network, be sure that a governing system is established and that all users are familiar with the rules and policies of that system. From there, once everything is implemented and running smoothly, you and your team can scale your system as needed to grow and change with your business.
The concept of blockchain technology can be confusing for those who aren't familiar with it, but it really is the way of the future — not just in cryptocurrency but in many other industries as well, including supply chain management. Through the tokenization of assets and in-depth features to enhance transparency and efficiency, this technology has a lot to offer. Now is a good time, then, for aspiring supply chain managers to familiarize themselves with blockchain networks and how to get the most out of them.
Looking to learn more about blockchain as it relates to supply chain management and effective business strategies? A Bachelor's in Business Administration (BBA) degree program from Indiana Wesleyan University covers these topics and more, preparing you with the skills and knowledge needed to break into the business world with confidence.
Learn more about our BBA program (or any of our other programs) by getting in touch today, or begin your online application for admission.
