4 Ways To Use Blockchain Technology In Supply Chain Management

, 9 minute read

Quick summary: With globalization, the food Supply chain has become more complex. Bigger volumes, more stakeholders, larger distribution channels, and legal and safety issues amount to a multifactorial management issue. With the implication of Blockchain in supply chain management, data can be accessed through its decentralized ledger system providing transparency throughout the supply chain.

It is estimated that more than 11 million pounds of food is been consumed every minute around the world.  

Diversification of markets is taking place every second.  

It is estimated that meals in the US travel 1500 miles from the farm to the plates. 

Roughly one-third of the food produced in the world gets wasted amounting to about 1.3 million tons 

A Supply chain refers to every such activity that takes place in the conversion of raw materials into finished goods or services up until it reaches the consumer. Under the food supply chain, activities include production, processing, distribution, consumption, and disposal.

This vast network of suppliers, organizations, and distributers coordinating to render a product from farm to fork is referred to as a food supply chain system. 

Supply chain Complexity 

Consumers want to experience the taste of every season. Locally produced foods have lost their charm, enter the exotic range! This results in early harvesting of a few of these exotic specialties leading to compromise on the quality and perishable nature. The food supply chains need to address these consumer demands in an efficient way. 

 With globalization, the food Supply chain has become more complex. Bigger volumes, more stakeholders, larger distribution channels, and legal and safety issues amount to a multifactorial management issue. For a systematic and smooth flow within the supply chain, companies opt for the supply chain management. It is the process of effectively handling the entire journey of a product through the supply chain to maximize quality, safety, delivery, consumer experience, and profitability. 

To manage such a colossal industry is a difficult task, and technology interventions are a must. Blockchain technology has revolutionized the food supply chains.

Blockchain is a digitalized ledger management system where stakeholders record data in a digital platform that is transparent to co-stakeholders and requires consent to alter or delete data.

A digital identity is created for every product that builds credibility and authenticity. The seamless integration of data enables visibility and transparency in the system, assuring high productivity, reduced product recalls and food loss, and provenance to comply to standards. 

Blockchain in the Food supply chain 

The implication of Blockchain in Supply chain management brought various advantages to the conventional recording system. 

  • Blockchain promotes digitization of data, the analog system to record data was a tedious task and also difficult to share between stakeholders. Now data transfer has become quick and easy through the decentralized data management under Blockchain. 
  • The conventional system of supply chain lacked transparency, Blockchain data management helps in sharing of data which gives access to information relating to raw materials, work in progress, production line, processes performed, and real-time logistics data. This feature helps for effective planning within the organization. 
  • For a good supply chain, data recording has to take place at every level of the product journey. Later such data can be linked with its downward movement, in turn helping in product recall in cases of defects or contamination. A product recall has become easier through Blockchain with better data recording and management. 
  • Provenance of product safety and quality wasn’t possible with the conventional system of the supply chain. Data recording at every output and input point has catered to such needs of customers who can view quality and safety data with the help of Blockchain technology. 

Check out the 5 factors that affect food supply chain management.

Learn how Businesses are using Blockchain in 2022 to achieving this end-to-end traceability

Trust within the supply chain can be viewed as pre-production trust and post-production trust. A product before coming into existence has to go through different processes and stakeholders. Only when there is trust between these players, does efficiency and smooth flow of product takes place. In the post-production trust, the consumer trust of quality and safety of the product that he consumes must take place.

This can only be achieved through Transparency within the supply chain. Only when knowledge about co-stakeholders and their processes is portrayed, trust is created. With the implication of Blockchain in supply chain management, data can be accessed through its decentralized ledger system providing transparency throughout the supply chain.

The manufacturer can know about where his product is and for what price it is sold, the processor can access information regarding raw material sourcing and harvest, and a consumer can derive knowledge about the time of delivery, quality, and safety of the product. To sum it up, a major part of supply chain trust can only be achieved through Transparency and clearly, Blockchain technology is revolutionizing food and agriculture value chains.

The major four ways that Blockchain Technology can be used in Supply chain management are, 

Permission Blockchain Transparency

Under Blockchain implications within the food supply chain management, connections between stakeholders take place digitally through contracts. There are agreements made between them, regarding the type and amount of information shared. It is appropriate that there will be little sensitive, concealed and private information regarding the product or the organization itself. Therefore, smart contracts and agreements are necessary to safeguard such information. For example, the souring of raw material by the manufacturer is sensitive information for the processor. Therefore, data-sharing agreements are vital.  

On the other hand, information sharing adds to the efficiency and effectiveness of planning of operations. When upward and downward processing data are available to stakeholders it becomes easier to plan for better management within the organization. The processor can know about the harvest, sourcing and logistics would determine to plan for processing, and a consumer can know product details like the origin of raw materials, delivery time, processing methods, allergic information, etc. All such data transparency helps in enhancing pre- and post-production activities.

Real-Time Visibility. 

Blockchain enables traceability throughout the supply chain. In a good supply chain, recording systems are at the input, output, and processing points. All these data recorded, at different places are visible in real-time. This means that live information is visible and the route that the product takes, and the processes it goes into are visible. This helps in monitoring the process and understanding the conditions, happenings, or occurrences of any issue.

These refer to as actionable data. i.e. business decisions can be taken immediately, not after an effect is occurred. If there are any contamination, counterfeit, or quality issues in the product’s journey, the product can be recalled using the real-time tracking feature of Blockchain. This feature in Blockchain technology helps in ensuring quality, safety, brand image, and trust. It saves huge amounts of costs incurred on food recalls. 

Increase Brand and Product Authenticity  

In today’s world, consumers are demanding the authenticity of the products that they are consuming. Lots of companies claim that their products are authentic, reliable and organic but how can a consumer believe these, are these really what they claim? Is there a method to determine their authenticity? Yes. Blockchain in Supply chain management helps determine such product authenticity.

Consumers can derive information relating to the product by scanning a QR Code present on the product which provides information relating to the origin of raw materials, sourcing methods, processing information, storage information, sustainable practices, allergic information, etc. This provides the required authenticity and builds a brand image in the minds of the customers and provides a competitive edge. The tamper-proof records provide a single source of truth and the claims can be validated. This builds trust in the consumer and nurtures brand growth. 

Seamless New Suppliers Onboarding. 

The conventional system for onboarding a supplier was a tedious and repetitive task. This used to take an average of 30 days for initial contact, authenticating and onboarding. The process had to be repeated every time a supplier had to be onboarded or the same supplier had to be onboarded elsewhere. Time and cost were a crucial factor.

Blockchain traceability solutions facilitate easy and fast onboarding. With in-hand digitalized data available with suppliers, details relating to business networks, bank details, business documents, and business processing details can be provided in no time. Such transparent details help in authenticating and developing trust among the various stakeholders. Onboarding stakeholders on a collaborative platform helps to build resilient, credible, and ethical supply chains. 

Blockchain in Supply chain 

Blockchain in supply chain management is truly a game-changer in the food ecosystem. It increases the supply chain efficiency enhances product traceability and improves coordination among stakeholders and showcases trust to consumers. Everyone within the network has access to immutable transactions and the digital records eliminate manual-based documentation. The digital authenticated records bring transparency in the system, reducing food fraud and enhancing food safety.  

Blockchain in supply chain management should give the following benefits 

  • Streamline the supply chain  
  • Expedite the product recall process 
  • Save costs incurred on food wastage and food fraud 
  • Comply with Regulatory standards. 

Check how TraceX , a blockchain-powered digital traceability platform is providing solutions to supply chain management across agriculture value chains.

A complete guide on supply chain management | Read here


Hyperledger private permissioned blockchain.

Data is captured in digital immutable ledgers which provide security and accountability of data . The decentralized platform enables transparency among stakeholders

The end to end traceability builds trust and transparency in the product thereby assuring consumers of a quality product. The farm management solutions help in improving market linkages and demanding a premium for the product.
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