Blockchain Brings Value to Touchless Supply Chains
With supply chains forced to operate on thinner margins, digital transformation is leapfrogging business priorities. The time to act is now. But onboarding proven technology to confront COVID-19-related challenges can feel as daunting as the pandemic itself.
Let’s look at digitizing existing logistics processes with blockchain from three angles: care, custody, and control. In all three categories, companies can replace and/or augment manual processes with an immutable system of record shared between supply chain counterparties.
1. Care. Commercial shippers are often plagued with supply chain security risks as they prepare to transport goods, with contingency plans constantly reworked and business owners lacking visibility within their own supply chains.
This lack of clear care in moving goods from point A to point B—and along the journey in between—is due to disjointed and inoperable information. Paper trails are messy, convoluted, and can hinder traceability and trust.
Blockchain solves this pain point by placing real-world events in an immutable, distributed ledger that can be easily shared through privatized, permissioned access. Automation streamlines time-consuming processes and ensures that execution aligns with contractual terms. Remote workers can redirect efforts to bolstering business operations while smart contracts execute routine processes and flag exceptions—transactions outside of agreed tolerances—for human review.
2. Custody. Maintaining a chain-of-custody—a chronological paper trail of transactions that reveals who has what, when, and where—is invaluable to logistics. Yet companies remain tethered to existing legacy systems that digitize haphazard paper trails and lack operability and information sharing.
Blockchain serves as a secure record of truth with every movement or transaction of a commodity tracked. With data stored for auditability or to enable automated smart contract transactions between stakeholders, supply chain custody can be revised to near real-time execution.
Contract automation provides a record of transactional history that can help businesses track and optimize their digital supply chains.
3. Control. In 2017, nearly 4 million Americans worked in warehouses as supervisors, material handlers, and/or packers, according to the U.S. Bureau of Labor Statistics. With social distancing protocols now a significant challenge, many companies are at a loss as to how to proceed to meet current market demands.
Identifying business processes, such as invoicing, that lend themselves to automation is critical. As a secure digital twin that captures data to corroborate real-world physical events, blockchain powers smart contracts, taking multistep, multiparty business processes down to one or two tasks.
Smart contracts allow companies to seamlessly manage by exception when the technology flags an instance outside of agreed-upon tolerances instead of working hands-on every single step of the way.
Make or Break
Automating transactions with blockchain allows companies to digitize value while bringing transparency, visibility, and speed to commercial relationships. Right now, touchless supply chain is one of the many competitive differentiators that can make or break a business.