How much do you know really know about the products you use everyday? You probably know the retailer you bought them from. You might know a product is sustainably sourced or the country of origin, but between coming from the original source and getting into your hands, there is an almost incomprehensible network standing between you and the products you use. Would you be able to make better buying choices if you understood the origin and journey the products went through? If you knew not only the retailer, but also all the other players along the supply chain, such as the suppliers. manufacturers, distributors, transporters, and storage facilities? Supply chain transparency for consumers is just one of many exciting opportunities that blockchain technology presents.
Blockchain can be defined as “a distributed ledger technology that can record transactions between parties in a secure and permanent way. (Blockchain In Logistics, 2018, p. 3). This distributed ledger maintains a constantly growing list of records called blocks. Each block contains a timestamp and a link to a previous block, and therefore, the information in a block cannot be altered retrospectively. By sharing the databases between all the participants, blockchain technology basically eliminates the need for third party intermediaries for logistics and supply chain companies (such as insurance, legal, brokerage, and settlement services), which allows for more direct relationships between the network participants. Blockchain can be used for contracts, tracking and payment; it also reduces bureaucracy and paperwork so that efficiency is greatly improved. And in addition to higher transparency for network participants and consumers, blockchain creates transparency for auditors, which in turn helps leadership understand how to make the supply chain more efficient. Blockchain technology also creates greater security for supply chain companies, allowing them to recognize fraud attempts almost immediately, since the shared ledger can only be updated with agreement of all participants in the network.
Ultimately, blockchain can increase the efficiency and transparency of supply chains and can create a positive impact on all aspects of the industry from warehousing to delivery to payment. Blockchain technology has the potential to deliver enormous savings by improving operational efficiency, but there are still many challenges to gaining full-on mainstream adoption. The hurdles are certainly not insurmountable, however, and blockchain is showing promise for supply chain and logistics as well as many other industries such as finance, retail, healthcare, automotive, and manufacturing.