Expected Benefits of Blockchains on Supply Chains

Expected Benefits of Blockchains on Supply Chains

The potential application of the blockchain technology to supply chains can be associated with a series of expected benefits:

  • Velocity of supply chains. This is particularly the outcome of faster transactions, such as payments, which are a common cause of delays. There is less latency in the system, benefiting the cash flow and reducing inventory carrying costs.
  • Supply chain visibility (tracking). Because of its distributed structure, a blockchain is extremely difficult to tamper with and each transaction needs the validation of the involved actors. It is therefore possible to use the blockchain to track shipments along an intermodal transport chain, identify issues causing delays and coordinate activities. An important aspect concerns a proof of delivery, which allows for the final settlement of the transaction. Because of its potential visibility, a blockchain can be used to create a market where transport and logistics service providers could bid to carry or handle the cargo associated with specific block(s).
  • Supply chain security (tracing). Since all the events of supply chain is stored in the blockchain as they took place, it is possible to see where, when and how a specific event took place. This is particularly relevant for cold chain logistics trying to monitor the integrity of a shipment across the chain. Counterfeiting and the use of sub-par materials would be easier to detect and trace since product information such as origin or batch number can be included.
  • Standards and certification compliance. Blockchains enable a more effective tool to ensure compliance to agreed upon standards and certification guidelines. Blockchain events offer a proof that cargo was handled by specific modes, carriers and distribution centers. The sequence can even be used to calculate accurately energy use and environmental impact (e.g. CO2 emissions).

By improving the above elements, the level of supply chain integration increases substantially.