Sales and Fulfillment
How is blockchain transforming value chain optimisation?
Supply chain management has traditionally been a behind-the-scenes process, often invisible to many stakeholders. However, the COVID-19 pandemic brought it to the forefront for many, helping stakeholders realise the importance of supply chains and the implications of any potential disruptions. As a result, businesses have been focusing on building robust supply chain networks to effectively navigate any potential disruptions in the future and ensure value chain optimisation.
Leveraging blockchain for supply chain management has been one of the most popular strategies for helping businesses build robust supply chains with enhanced visibility, transparency, efficiency, and sustainability. But how is this technology, popularised by cryptocurrency, helping businesses manage their logistics and inventory?
Benefits of blockchain in supply chain management
Predicting supply chain risk, enhancing traceability, and building trust in this multi-stakeholder environment are the building blocks of value chain optimisation. Leveraging blockchain to manage different facets of the supply chain addresses these aspects at their core, helping businesses optimise their value chain.
Here are some of the major benefits of blockchain in supply chain management, helping businesses build a robust value chain:
Enhanced visibility and transparency
A supply chain is essentially a distributed network of multiple moving parts – vendors, suppliers, and other stakeholders. With data coming from and going to multiple sources, it becomes challenging to ensure end-to-end visibility and transparency. Using blockchain in logistics and supply chain management helps overcome this issue, ensuring a single source of truth is available to every stakeholder.
Enhanced traceability and trust
An extension of the previous point, leveraging blockchain solutions for inventory management enhances traceability and trust through tamperproof ledgers. As a result, you can trace every product to its origin, audit any changes in the data, and establish trust in this multi-stakeholder environment.
Enhanced security
With the enhanced level of traceability, which legacy systems cannot match, businesses can easily combat the issue of counterfeit or unsafe products reaching customers. Additionally, the distributed ledger makes it difficult for malicious agents to tamper with the data, creating auditable traces of any changes and securing sensitive information, trade secrets, and intellectual property.
Reduced risk
Accessible, accurate, and complete data are foundational to effective risk management, which blockchain facilitates in supply chain management. Additionally, businesses can also integrate IoT, satellite, or cellular data with blockchain solutions to further minimise, mitigate, and manage distribution and inventory management risks.
Streamlined payments, contracts, and workflow
Apart from enhancing transparency, traceability, and security, blockchain in logistics also supports intelligent automation for improved efficiency. Smart contracts ensure automatic execution and payment upon completion, preventing delays, disputes, and revenue leakage. This removes hierarchy from supply chain interactions, enhancing flexibility and liquidity for all stakeholders and reducing payment cycles and bargaining power inequalities.
Efficient inventory management
Blockchain in inventory management can help connect all the warehouses, integrating IoT sensors for real-time visibility and insights into inventory levels and movement. This, coupled with machine learning predictive capabilities, can help companies avoid stockouts and improve demand forecasting for inventory optimisation.
Simplified supplier onboarding and verification
Blockchain solutions also simplify supplier onboarding and verification. You can securely store supplier credentials, certifications, and compliance records, ensuring the supplier meets the necessary compliance standards and safeguarding yourself from non-compliance penalties.
Ethical and sustainable supply chain
Tracing the origins and certifications of every product, blockchain ensures every stakeholder adheres to ethical and sustainable supply chain standards. As a result, it not only promotes trust but helps customers evaluate environmental impact, authenticity, and labour conditions related to the product to make an informed decision.
Common challenges when using blockchain in logistics
Although blockchain applications in supply chain management offer many advantages, it also presents critical challenges that can hamper their implementation. Some of the key challenges include:
- Lack of interoperability standards
- Scalability considerations for public blockchain networks
- Potential security and privacy risks – especially when it comes to confidentiality, data integrity, smart contracts, and consensus mechanism
- Stakeholders buy-in
Reputed blockchain and supply chain management services providers are making strides in making blockchain frameworks accessible and reducing barriers to adoption. Careful change management, staged onboarding, and pilot programs can help businesses overcome these challenges and facilitate value chain optimisation with the right service provider.
How can Infosys BPM help facilitate value chain optimisation?
Agile and responsive supply chains are the key to succeeding in today’s dynamic market environment. Infosys BPM digital supply chain services offer end-to-end solutions—across consultation, technology intervention, and managed services – to facilitate value chain optimisation. With specialised solutions like supply chain diagnostics, SC control tower, SC shared services advisory, inventory optimisation, and forecasting-as-a-service, you can leverage best-in-class technology and blockchain solutions to ensure efficient supply chain management.
