In practice, current supply chains are opaque and imperfect, and difficult to manage. The problem can be solved with blockchain, an emerging technology that has proven to be useful in bringing transparency and efficiency to a range of industries. But for this, businesses need to be ready for an open and transparent policy.
Many supply chains have become global and complicated, which has added complexity to management. Companies have several suppliers with networks of their suppliers. The remoteness of delivery regions, the difference in business approaches and standards, increasing consumer requirements for services and products, and increasing the number of participants in supply chains are growing barriers to transparent and manageable interaction of suppliers.
A typical delivery scenario involves about 15 parties: shippers and suppliers, 3PL carriers, government services, banks, insurers, and others. Maersk
calculated, that one delivery requires more than 200 paper documents: PODs, invoices, BOLs. The cost of maintenance of this paperwork is $300, or 10-15% of the cost of transportation.
Efficient supply chains must be reliable, flexible, and sustainable. All processes there should be quick and transparent. Companies need optimization, improved delivery of the last mile, regularity and reliability of deliveries, agility to new partners, and manageability of carbon emissions
and waste recycling. It means increased demands on high-quality data flows, transparent document sharing, and trust.
Paper documents can no longer contribute to productive work. Digital reports in different companies are integrated into various delivery management software that is often incompatible. It is why companies should pay attention to blockchain-based products.
Blockchain is a distributed ledger, a network storage technology. Digital dataflow in the blockchain can be used simultaneously by all parts of the network. The absence of a central administrator and encryption makes it impossible to replace, edit, or delete data invisibly. The unchangeability of data increases confidence in it. It is necessary for legal use.
IBM has calculated
that the implementation of blockchain could save $38 billion a year in the logistics industry. It will be possible by smart contracts. In addition, the distributed ledger will decrease the number of failures in documents, reduce the delivery time and detect fraud efficiently.
The number of companies that have already implemented blockchain projects is not large and projects still are not knowledgeable. Companies are gaining data to make a step to the blockchain. There are no global standards and legislative frameworks, and global operators that would support the blockchain system, monitor its condition, ensure the integration of new entrants.
believe it is unclear if one or two dominant solutions or multiple competing solutions will emerge and how quickly. At the same time, technology has great prospects, giving increased security of the supply chain, reducing bottlenecks (certification by third parties), and the number of errors (no more paper documentation).
Professor Jorge Calvo, Deputy Dean at GLOBIS School of Management Tokyo and Executive-in-Residence at ESADE Business School Barcelona-Madrid, notes that business is just not ready yet for transparency.
Blockchain is going to be greatly beneficial. First of all, its integration into the supply chain is impossible if there is no transparency. Technology would not contribute when suppliers keep silent. By definition, when we go through the visualization, we need to improve to be crystal clear and give all participants access to information they need. This is how I saw the big challenge for the future.
is both a condition and a result of blockchain integration. Companies must take responsibility and be prepared to move from the classic organization of business processes to electronic smart contracts
, as well as have a clear understanding of the benefits of technology. When society has leverage over companies, managers are wary of discovering information and being transparent. This can lead the company to decline and collapse in the public eye.
It is also a social responsibility that the company is going to contribute. Companies have to change suppliers when there are revealed any unacceptable facts about their previous ones. Society is one of the stakeholders now. Social networks have a huge impact on companies, reacting badly to reveals and bad news, - Jorge Calvo adds.
The contemporary consumer is focused on ethics more and more. ESG investments
are becoming more widespread. Instead of hiding information, it is important to restructure the business processes to meet the ethical requirements of sustainability to become part of the future economy.