Author: Tronserve admin
Thursday 29th July 2021 11:13 AM
How to Use Blockchain for Transparency Across Your Supply Chain
Mostly, controlling contractual obligations for every supplier and sub-supplier is dangerous and uncertain mainly because it relies on trusting the supplier as an intermediary. While selective audits can reduce the risks, they can’t ensure compliance across the board.
To reduce those risks, companies are considering blockchain technology. For example, Mercedes-Benz a short while ago reported the launch of a prototype blockchain-powered supply chain to manage its complex global network of partners. The biggest mission is to provide transparency beyond the company’s direct suppliers.
In Mercedes-Benz’ blockchain model, sub-supplier sign-offs are documented and exposed to authorized users, giving a tremendous boost to the company’s goal of sustainable and ethical conduct in its supply chain. The company never has to rely on trust in its intermediaries: It can see, in real time, the integrity of the supply chain.
Companies evaluating blockchain prototypes, and those that have gone further, have found that transactions along their supply chains become more transparent and reliable. Beyond sign-off on flow-down clauses, blockchain can be a helpful component in ensuring compliance on every individual transaction. For-instance, some suppliers or resellers may have agreed to particular limitations on where or to whom some products may be sold, or what terms are available to specific customers.
When shared into a blockchain, the system’s smart contract logic can investigate individual transactions against that information to identify exceptions. Critically, enterprise blockchain technology can perform compliance checks while maintaining the privacy of those involved in transactions.
Increasing transparency now is easier because blockchain provides irrefutable, easily accessible records of compliance and transactions. Ensuring compliance on a blockchain is far more effective — and less expensive — than auditing upstream suppliers or channel partners.
Along with tracking commitments to contractual obligations, blockchain systems can immediately record proof of delivery of goods or services. In this way, blockchain can provide much higher visibility into overall inventory levels for faster and more accurate inventory management.
Translating Transparency to Success
With fast proof of delivery, the system can also transform invoicing and payment processes. Immediately after proof of delivery is recorded, it could quickly generate an invoice, or the proof of delivery itself can become the obligation for payment. As use of blockchain technology advances, payments may be automatically prepared and recorded upon delivery.
Way before instant payments come to be a norm, streamlined delivery and highly visible inventory help create a more trustworthy system for inventory prediction and planning. Correctly predicting when products will likely be delivered can increase customer satisfaction. Reducing the need for excess stocking, another benefit of transparency in the supply chain, will also alleviate painful bullwhip effect.
First Steps in the Blockchain
Whatever the extent of your supply chain and the elements within it, these are means to start implementing your blockchain journey:
1. Share Details
Many suppliers already use electronic data interchange. Yet still, buyers may need additional details like serial numbers and configurations of specific products in shipments. Sometimes, EDI or vendor limitations make it tough or unworkable to share these details. That is why, they still have to be emailed as spreadsheets or sent through other inefficient methods.
In blockchain, these details can be shared more effectively, along with information about quality checks and compliance certifications for each product in the shipment. While this sharing may just be between suppliers and their own buyers for now, this first step into blockchain will pave the way to include all downstream participants in the supply chain and gain dramatically more benefits.
2. Access Logistics
In the spirit of making secured information-sharing the norm in your supply chain, you can even use blockchain to take advantage of logistics information that your partners have access to but that you don’t. As an example, a buyer may not have an integration to a supplier’s carrier or 3PL vendor, but the carrier has information about the shipment and its condition.
With products such as produce and pharmaceutical goods, that information is particularly important. Using blockchain, the supplier can share this information with the party that receives the shipment. It can also be made obtainable to all supply-chain participants further downstream who value knowing how their products are being handled.
3. Motivate Partners
To comprehend its full potential, every link in the supply chain should take part in the blockchain network. To get partners on board, promote the technology’s proven success by highlighting endeavors such as the Mercedes-Benz prototype blockchain. In this case, emphasize the value the company achieved by making corporate social responsibility completely transparent across its supply chain.
The bigger value for your company may be improving connectivity with sub-suppliers and other partners. As they accept the value of controlled data-sharing through blockchain, a lot of new opportunities will arise for improving communication, collaboration, and transparency across all supply chain operations.
While transparency and expediency are among the most prominent features of implementing blockchain into your supply chain, the technology is capable of more. Concentrating on your early use of blockchain on transparency will loose you to specialize more on other opportunities. As a result of the increased trust that this new technology provides, you can move forward with uses that are more transformative to your supply chain.
This article is originally posted on manufacturing.net