Blockchain in the supply chain.

Blockchain can be used in the supply chain to create a secure and transparent record of every step in the process, from the origin and procurement of raw materials, through the manufacturing process, the transportation and storage of goods, to the final delivery to the customer.

By using blockchain, each party involved in the supply chain can create a permanent and tamper-proof record of their actions. Everyone has access to the same information, helping to reduce fraud and errors. Plus, the increased collaboration can reduce delays in distribution. All parties can see exactly where the goods are at any given time and can work together to prevent or mitigate problems for a more efficient and streamlined supply chain.

The supply chain blockchain can also be used to host and run smart contracts. These self-executing contracts have the terms of the agreement built in and automatically trigger actions based on certain conditions being reached.

For example, a smart contract could automatically pay a supplier invoice where it is verified that the shipment has been successfully made. Or it could track the movement of goods through the supply chain, sending notifications to everyone at prearranged checkpoints. Or it could trigger alerts for non-compliance with regulations or notify stock levels drop below a particular threshold, even automatically placing an order to replenish stock.

Smart contracts eliminate the need for manual processes and intermediaries, speeding up workflows and making them less costly and more efficient. They can also help to reduce fraud and errors since the code is self-executing and tamper-proof.

Using the blockchain can significantly enhance traceability in the supply chain. All supply chain partners can record and access relevant information about the goods. This might be price, quality, temperature or location data. Having this information available and unchangeable on the blockchain can ensure accurate traceability of the material supply chain. In turn this can reduce losses that might otherwise result from the sale of counterfeits. And it increases visibility and compliance in manufacturing, which can enhance a company’s reputation as a responsible manufacturer.

Jewellery retailer Monica Vinader employs blockchain technology to deliver greater supply chain transparency for its customers. Its product passports initiative enhances traceability for its consumers, allowing them to see who has input into the manufacture of the company’s products at each stage of the supply chain.

Distributors can use the blockchain to monitor and verify transactions. The database is a distributed ledger of transactions that is completely decentralised across a network of computers. Because of this, it cannot easily be manipulated, giving all participants confidence in the data’s accuracy and therefore in the authenticity of the products and the suppliers. Every time a raw material, component or finished product changes hands, the transaction is securely documented, providing an inalienable record of the provenance and movement of goods.

Additionally, all data is shared in real time, so everyone has access to the same ‘single source of truth’ with up-to-date information. The use of blockchain technology can provide accurate insight into stock availability or provide current figures for improved responsiveness or for informing more accurate forecasts.

The blockchain helps maintain the integrity of products like food and drink or pharmaceuticals that need to be stored and transported in temperature-controlled conditions. If temperatures or other atmospheric conditions are checked and logged on the blockchain, these cannot be changed, so if an anomaly occurs, there is no possibility of those responsible being able to amend data to cover up mistakes.

With a tamper-proof and distributed database of all transactions, movements, activities and other data, the blockchain improves security for all parties in the supply chain. It provides a trustworthy system for all those involved to access the same data and be held similarly accountable for their actions.

The blockchain uses cryptographic algorithms and consensus mechanisms to provide further security measures. By ensuring that data cannot be altered or deleted without the consensus of the entire blockchain network, it remains highly secure. This helps prevent fraud and malicious activity, resulting in a more secure supply chain.