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Blockchain-empowered supply chains
Although blockchain technology has traditionally been associated with cryptocurrencies, its potential to enhance supply chains in various industries has in recent years come into the spotlight. Many of the common pain points that traditional supply chains face, such as a lack of transparency, traceability, control, and inefficiencies, can be mitigated with the aid of blockchain technology, benefiting all stakeholders across the supply chain.
Published: May 19th 2023
By: Morten Vaage and Caterina Luisa Rokke
While many people associate blockchain technology with cryptocurrencies, it is also used to strengthen supply chains, providing several benefits to consumers, investors, and companies across departments and roles, including COO, CFO, CSO, and Supply Chain Manager. It is important to note that unlike cryptocurrencies, which use blockchain technology to create a digital currency, the use of blockchain technology in supply chains is focused on creating a secure, immutable, tamper-proof, and transparent record of transactions.
Increased transparency and traceability with blockchain technology
One of the main benefits of blockchain technology in supply chains is the increased transparency and traceability. Today, consumers, investors, and authorities are increasingly demanding transparency in supply chains. They want to know everything from a product’s origin and manufacturing process to its environmental impact and carbon footprint. By using blockchain technology, businesses can provide tracking and tracing information about product provenance in real-time, ensuring product and supply chain transparency. This can help the company build trust with its consumers and investors, subsequently strengthening their brand reputation whilst also gaining additional insight into their supply chain (e.g., CO2 analytics). For instance, the French fashion brand LVMH launched the Aura Blockchain consortium to help them, their customers, and other stakeholders track and trace information about the provenance of their products.
Meeting new regulations and reporting requirements
Furthermore, governments and regulatory bodies are imposing new regulations and reporting requirements to ensure that companies operate ethically and sustainably. Blockchain technology can help companies meet new reporting requirements by providing a secure and auditable system that can track and record every transaction in the supply chain. Moreover, by providing an immutable record of all transactions, blockchain technology can assist companies in demonstrating compliance with regulations and avoid brand reputation damage and expensive fines. For instance, a company in the battery industry that needs to report on carbon footprint and follow waste management regulations can use blockchain technology to provide a transparent, traceable, and auditable supply chain and product life cycle.
Navigating complex supply chains and gaining control over suppliers
A common pain point for companies is the lack of control over their supply chain and its suppliers. Many supply chains are complex and involve a number of suppliers, which can create risks for companies, such as reputational damage and supply chain disruptions. The complexity of modern supply chains, which often involve multiple suppliers and stakeholders, poses significant risks to the business, including reputational damage and disruptions in the supply chain. A healthcare company could use blockchain technology to increase control over their supply chain and suppliers by using real-time data to track and trace the distributions of vaccines, ensuring the authenticity of their products and reducing the risk of counterfeits.
Blockchain solutions for resilient supply chains in a dynamic market
Recent disruptions in the global market have exposed the vulnerabilities of traditional supply chains and have highlighted the importance of having a resilient and flexible supply chain network that can quickly respond to disruptions. With the shift from traditional linear supply chains to network-based supply chains, blockchain technology can help create a more resilient supply chain network by providing a transparent and secure record of transactions that can be tracked in real-time. An energy company could use blockchain technology to minimize the impact of supply chain disruptions by responding quickly through automated and decentralized supply chain management, enabling them to identify and address disruptions in real-time, and ensure continuity of their operations.
Blockchain's business value for supply chains and organizations
Overall, blockchain technology has the potential to strengthen supply chains and provide a range of benefits across various roles and departments. For instance, the COO can leverage automation to reduce transactional costs, while the CFO can gain greater visibility into financial transactions, thus enabling faster, and more accurate financial reporting. Furthermore, the CSO can leverage the immutability and transparency to enhance security and responsible supply chains, and lastly, the supply chain manager can use blockchain technology to improve visibility and traceability, ultimately enabling better inventory management.
Deloitte has extensive experience serving as a reliable partner within technology assessment, strategic development, implementation, ecosystem, and selection in blockchain-related projects in various industries, including Energy, Resources & Industrials, Healthcare, Public Sector, Financial Services, and Consumer.
Are you interested in discovering how blockchain technology can revolutionize your supply chain and generate tangible business value? At Deloitte, we have a tailored approach that we’d be more than happy to discuss with you.
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