Grace Ashiru
Blockchain technology is known by various names, such as game-changer, disruptive, futuristic, and impenetrable.
These titles are all well-deserved and valid. Initially linked with cryptocurrency, blockchain has truly established itself and now extends to health, transportation, disaster recovery, and notably, supply chain management.
With its capability to create secure and transparent networks, blockchain holds the potential to transform how we manage supply chains. According to the report by Market Research Future (MRFR), the Blockchain in Supply Chain Market is projected to reach $17.15 billion at a CAGR of 45.55% by 2030.
“The development of blockchain technology and its applications is driven by the demand for greater supply chain transparency and improved security in supply chain transactions,” states MRFR.
Though blockchain has existed since 2009, when Satoshi Nakamoto introduced Bitcoin and blockchain technology to the world, it is essential to take a moment to fully grasp its significance.
Firstly, blockchain technology is decentralized. Unlike traditional databases, which are typically governed by a single entity, blockchain enables multiple parties to engage in the network and verify transactions. This signifies that there is no central point of control and no single point of failure.
Another crucial aspect is security; once data has been recorded on the blockchain (through cryptography), it cannot be modified without consensus from network participants. This renders it nearly impossible for hackers or malicious actors to manipulate data on the blockchain.
Additionally, there are several distinct types of blockchains, including public, private, and consortium blockchains. For instance, private blockchains are exclusively accessible to authorized participants who have received permission from the network owner.
Blockchain technology significantly enhances supply chain efficiency by optimizing tracking and tracing processes.
One of the primary challenges confronting supply chain managers today is maintaining visibility throughout the entire network. As goods transition from one location to another, accurately tracking them can be quite challenging.
This is where blockchain comes into play. By establishing a secure and transparent network that facilitates real-time tracking of goods at every stage of the supply chain, blockchain technology can assist in addressing many of these challenges. It offers a tamper-proof ledger that guarantees data integrity while allowing all parties in the network to access information in real-time.
Additionally, this feature makes it an appealing solution for South African businesses that demand transparency and traceability. For instance, in agriculture, where both provenance and authenticity are crucial, blockchain fulfills the needs of an increasingly discerning consumer marketplace—origin and quality are significant prerequisites when purchasing goods.
Going a step further, AI and blockchain together enable the real-time tracking of products from source to destination. This transparency promotes sustainable practices, such as verifying organic certifications, fair trade, and responsible sourcing.
Moreover, by monitoring energy consumption, emissions, and waste, AI-driven analytics can pinpoint areas for improvement. Blockchain strengthens this initiative by ensuring data accuracy and trust, allowing stakeholders to collaborate on environmentally friendly initiatives.
Blockchain can also substantially lower transaction costs and overhead by removing intermediaries and streamlining processes. Smart contracts, which are self-executing agreements coded on the blockchain, automate routine tasks and enforce contractual obligations.
This not only saves valuable time and resources but also minimizes the risk of errors and disputes, resulting in more efficient supply chain operations.
To reiterate, blockchain provides the following significant advantages to supply chains:
- Traceability – It establishes an immutable ledger documenting every product’s journey, from origin to destination. This transparency facilitates accurate tracking of goods, enhances accountability, supports product recalls, and fosters consumer trust.
- Transparency – The decentralized and tamper-proof ledger of blockchain offers real-time visibility into inventory levels, order statuses, and ongoing work. This transparency enhances coordination and decision-making.
- Transparency and Trust – The decentralized and transparent nature of blockchain guarantees that all parties have insight into the contract terms and their execution. This transparency cultivates trust among supply chain participants, as everyone can verify compliance with the pre-agreed terms.
- Cost Reduction – By removing intermediaries and reducing manual paperwork, smart contracts lower administrative costs. This also diminishes the risk of errors or disputes, resulting in overall cost savings.
- Real-Time Verification – Smart contracts validate data and events instantaneously. For instance, when goods are received, the contract can automatically initiate the release of payment. This real-time verification ensures compliance with agreed-upon terms without any delays.
