Interest in blockchain platforms has been growing significantly as a way to streamline supply chains, improve traceability, simplify trade and improve financial transactions. A lot of this interest started with the speculative frenzy surrounding Bitcoin, which is based on an older blockchain platform that faces challenges with energy consumption and speed.
Modern blockchain platforms have been developed to help overcome these limitations and provide practical value for other business uses and applications.
Blockchain applications in supply chain tracking, trade finance, digital assets and identity management are going beyond the pilot stage. Also market has also seen a fair bit of activity in using blockchain platforms for building certain functions of ERP, such as vendor management and supply chain management.
The evolution of blockchain platforms to date has promoted heightened awareness of decentralized finance, or DeFi, for driving new business models that pose significant threats to traditional banking, finance and supply chain finance.
Predicted that blockchain platforms could disrupt legacy supply chain businesses and technology processes (Alex-Paul, 2024).For example, U.S. requirements for pharmaceutical companies to track and trace products and materials call for a new approach for supply chain participants to share and transact data more efficiently and with more transparency than previously required. Blockchain technology could be the answer.
According to Alex-Paul, the top three blockchain frameworks for these use cases are R3 Corda, Hyperledger and Ethereum, with EOSIO and ConsenSys Quorum gaining ground.
What is Role of Blockchain in Supply Chain Management?
Blockchain can facilitate increased transparency alongside reducing the costs and risks associated with supply chain management. Here are the critical value benefits of blockchain for the supply chain management.
- Better end-to-end traceability of materials in the supply chain for compliance with corporate standards.
- Limitations on product counterfeiting and fraud.
- Improved transparency and visibility into outsourced contract management with better control over compliance.
- Lower paperwork and reduction in administrative costs.
Blockchain could improve credibility and gain the trust of the public through open access to supply chain data. Most important of all, timely detection of malpractice risks within the supply chain help in avoiding public relations issues. The future of blockchain in the supply chain depends on how effectively businesses can integrate technology into their business operations. Companies interested in using blockchain to transform their supply chain management operations should also identify the challenges. Blockchain can offer formidable traits for improving supply chain operations, such as security and decentralization.
Blockchain can play a crucial role in empowering every stakeholder in the supply chain alongside presenting new avenues for sustainability. The different examples of blockchain applications in supply chain management showcase the potential of blockchain for introducing new efficiencies. In the future, blockchain will become a mandatory foundation for creating smart supply chains.