What is the Supply Chain?
“Supply chain” is a broad term that refers to every manufacturing, shipping, or warehouse process a product goes through on its journey from raw materials to consumer use and consumption.
In the case of food products, that means every stop or transaction between the farm and people’s tables represents a link in that chain. For manufactured goods, the supply chain connects mining, logging, and other resource harvesting techniques to processing centers, factories, warehouses, and ultimately, distribution to retail locations.
Why Do We Need to Protect the Supply Chain?
When supply chains operate smoothly, orders can be filled in a predictable manner, shelves stay stocked, and consumers remain satisfied. When logistical snags and hold-ups occur at any spot in the chain, however, successful manufacturing, distribution, and sales are all threatened.
As in the case of medical vaccines, the supply chain that powers our way of life is protected by a sort of “herd immunity,” in which each organization carefully maintains their sections of the chain for both their own business health and the protection of the market as a whole.
What is Blockchain?
Blockchain is a recordkeeping technology that allows for direct, richly documented and tamper-resistant documentation of financial transactions in a peer-to-peer marketplace. Basically, blockchain enables direct person-to-person or business-to-business transactions that have the security of a traditional bank transfer.
That means transactions in a blockchain environment can fully clear on any day of the week or year without the hold-up of waiting on banks to communicate with each other, and funds are accessible to the recipient as soon as the transaction is completed. In this way, blockchain both speeds up the nuts-and-bolts process of making payments and reduces both the buyer and seller’s dependence on third parties.
How Does Blockchain Recordkeeping Work?
To get a little more technical, the term “blockchain” specifically refers to the way records are kept using this technology. Each individual transaction or data point in a financial relationship constitutes a “block.” When a transaction is completed, all parties involved in the transaction validate the block and it is connected to a running record of all interactions – the “chain.”
Each block is securely encrypted but also coded in a way that indicates its place in a sequence of transactions and the nature of the transaction. That information is indelible, which means that blockchain transactions are even more richly documented and accountability-minded than traditional bank transfers.
How Can Blockchain Protect the Supply Chain?
Blockchain and supply chain are a natural pairing because blockchain is good at achieving what the supply chain needs: providing a secure, well-documented framework for repeat transactions between close partners. By transferring their nearest supply chain partnerships to blockchain transactions and record-keeping, businesses can keep the flow of parts, supplies, and widgets open, protecting businesses and consumers alike.
By eliminating reliance on outside banks, businesses that use blockchain can significantly accelerate ordering and payment, creating an environment where automation and one-touch approval for regular orders are possible. In a scenario where there was a disruption to the financial system, blockchain technology could similarly help keep innovative businesses open while production and distribution for others grinds to a halt.
How is Blockchain Connected to Logistics?
Blockchain technology is used in supply chain scenarios to enable businesses to maintain the flow of parts and supplies coming in from repeat vendors and close business partners to maintain a consistent, profitable output that’s protected from the slow pace of traditional bank-to-bank financial transactions.
Once any item – a finished product or even a simple screw – enters into a blockchain-powered supply chain, it is part of a comprehensive and indelible documentation system that provides full traceability of each part and documentation of every transaction or event it’s been a part of from cradle to marketplace. That means blockchain isn’t just about documenting the financial transaction – it’s also a best-yet documentation system for logistics.
How Can Blockchain Revolutionize Logistics?
Tracking and Traceability
For a few decades now, businesses and consumers alike have been able to track shipments with regular updates as the package moves from facility to facility. In the case of consumer goods, we’ve basically perfected the system. With that said, blockchain provides opportunities for enterprise businesses to get more information than ever about what they’re ordering and what they’re shipping.
Blockchain documentation enables not just a view of where a part or shipment is now, but a full historical manifest of everywhere the shipment ever has been or is scheduled to go. Each truck and facility the shipment has ever gone through can be gleaned in an instant, and live updates allow businesses to know exactly – not just approximately – where their orders are in the shipping process.
Using blockchain, each individual product or part can be tracked back to its origin point in the supply chain. That degree of insight simplifies the process of recalling products and enables gathering data about differences between production facilities, subcontractors, or even individual drivers.
Accountability and Best Practices
When supply chain partners use blockchain documentation for their repeat orders, they create the richest-yet data pool of insights to assess their logistical success. Everything from driver comparison data to instant part tracing or live, real-time tracking information can be accessed to ensure the integrity of workers at every level of the logistical process and build a culture of high expectations.
Those data-based takeaways about logistics and blockchain also go a long way to help organizations reflect on their approaches and discover or refine best practices that ensure they’re maximizing their relationships with their closest strategic partners .
Warehouse and Supply Chain Automation
The incredible granular tracking and documentation ability of blockchain has the potential to completely change the way we think about warehousing and logistics. In fact, using blockchain, some business partners have been able to build automated ordering and shipping processes that keep the supply chain flowing without humans needing to lift a finger.
Using blockchain and AI, businesses can build predictive processes that ensure that no part is ever run out of and no order is ever forgotten. Once each part or item is documented in the system, its addition to new orders or outgoing products is noted, allowing for accurate record-keeping of warehouse supplies. A second level of blockchain AI recognizes both ordering patterns and the existing supplies of each part on hand, generating an order before supplies ever run low.
If you’re looking to embrace blockchain technology to improve your organization’s level of logistical control and data, Sofbang is the ideal blockchain solution provider to help you transform into a future-facing supply chain partner. Even if you’re not sure exactly how blockchain can help your business achieve goals but are excited about the technology, contact Sofbang today to chat with one of our professionals about what’s achievable with blockchain.
Learn More About Blockchain for Business with Sofbang
Sofbang is a leading innovator of blockchain solutions for organizations of all sizes looking to secure their supply chain and build a cutting-edge, business-accelerating system powered by blockchain. We specialize in helping blockchain newcomers identify opportunities for pilot programs and roll out blockchain initiatives in a scalable, richly supported manner.
If you’re hoping to learn more about how blockchain can improve business in supply chain and other scenarios, contact Sofbang today!