2020 — The Wake-up Call for Strong Supply Chain Management

2020 — The Wakeup Call for Strong Supply Chain Management
2020 — The Wakeup Call for Strong Supply Chain Management

2020 thus far has been a tumultuous year for everyone — individuals and businesses — globally. The impact from the novel Covid-19 virus has been felt in all corners of our world, introducing along with it many “new normals” people must now face daily to fight this pandemic.

While most industries are battling against a myriad of challenges currently, one thing is for certain, we must do everything we can to support global supply chains.

Ensuring that the flow of goods and services is not compromised for the billions who need them in these difficult times is paramount.

Impact of Covid-19 on Supply Chains

Supply chains have been hit hard by Covid-19. Reduced international travel, lockdowns, and quarantines have disrupted business operations globally, halting the flow and availability of products and making it difficult for buyers to keep track of what is happening to their supplies.

In an industry that is still heavily “paper-driven” and managing a lot of information manually (i.e. purchase orders, bill of lading, invoices, etc), these issues are multiplied further by the lack of transparent and trusted data.

The pandemic is putting a spotlight on the many issues that exist in supply chain management.

It is imperative now more than ever that companies assess their supply chain technologies and management to ensure sourcing, procurement, manufacturing, distribution, and logistics are integrated into a cohesive system amongst their various stakeholders.

Unfortunately, a lot of organization’s supply chain tools are structured in a way that is inefficient and inflexible compared to the innovative technologies available to us today.

Blockchain can help. But how?

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Improving the traceability of supply chain processes can help companies ensure that corporate standards and responsibilities are being followed | DLT Labs

By incorporating blockchain technology into supply chain management, companies can tackle a few pressing issues head-on:

  1. Improving transparency throughout the supply chain cycle,
  2. Instilling trust amongst multiple stakeholders, and
  3. Optimizing efficiencies of business processes.

By moving the flow of critical data elements and processes of a supply chain to a blockchain, stakeholders can easily identify and trace the movement of supplies from their point of origin to their destination, in a mutually understood way.

Using the blockchain, supply chain participants would all share and contribute to the same blockchain ledger, helping to transparently identify where the information is coming from, going to, and when.

Blockchain technology within supply chains allows participants to trust the data available to them and make more informed decisions.

Improving the traceability of supply chain processes can help companies ensure that corporate standards and responsibilities (i.e. ethical sourcing) are being followed.

The provenance of the supply chain information is also highly visible to all, and through a digital-first approach (encompassing physical, financial, and digital information, available from a single decentralized source), easy to prove due to the ability to quickly create digital certificates in real-time on the blockchain.

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Integrating Blockchain into supply chain results in increased trust between stakeholders | DLT Labs

In a traditional supply chain, participants can have difficulty trusting other stakeholders, as it is not easy to determine whether or not they are upholding their “agreements” and/or providing accurate information.

By leveraging blockchain as an underlying technology layer in a supply chain, data collected can be made immutable and tamper-proof, requiring digital signatures to attest information ownership.

> If multiple stakeholders work together, they can utilize the blockchain to store data about the ownership, location, and state of their supplies for example. The information would be secured by the blockchain, auditable by participants, and tell a single version of the entire supply chain history. Since everyone shares the same source of “truth”, the status within a supply chain is undisputable.

> If issues are present, they can be identified quickly and resolved in an auditable way. If a participant tries to game the system or behave fraudulently, that participant would only be manipulating their ledger and it would be out of sync with other participants' ledgers, alerting all stakeholders in real-time that something is off.

Blockchain technology within supply chains allows participants to trust the data available to them and make more informed decisions.

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Optimized supply chain processes due to blockchain can result in substantial cost savings over time | DLT Labs

Companies can optimize their supply chain processes by eliminating the need to duplicate data entry, check and re-check systems for data accuracy, and digitize business logic through smart contracts by using blockchain — the cost savings over time are substantial. If so inclined, payments among supply chain participants can also be systematically handled through smart contracts (digital contracts) and processed and settled instantaneously if alternative currencies such as Stablecoins are used.

Blockchain is an Integrative Solution

Blockchain for supply chains is not merely a piece of software to buy, it’s actually the opposite. It is an integrative solution to current fragmented infrastructures.

Nowadays, it’s rare to see big vertically integrated companies with ‘static’ supply chains. Supply chains have shifted from traditional networks of OEMs and suppliers to expansive ecosystems, with products and supplies moving through multiple parties and a range of distribution models.

Understanding this reality means that with blockchain technology, companies can rebuild their approach to supply chain management at the ecosystem level and transition from islands of insight to an integrated global view.

The DL Freight Solution by DLT Labs is one such working and proven example of how Blockchain can tackle pressing issues and enable supply chain enterprises to be future-ready for any pandemic, enabling overall operational efficiency.

Author — Pritom Paul, DLT Labs

About the Author: Pritom is an experienced business analyst and product management professional who has worked on delivering global enterprise products, FinTech transformations, and innovative blockchain solutions. He enjoys staying abreast of current technological advancements and helping clients solve challenging problems. He is a Toronto Raptors fan and a classic car enthusiast.

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DLT Labs is a global leader in Distributed Ledger Technology and Enterprise Products. To know more, head over to: https://www.dltlabs.com/

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