Blockchain is a relatively new term in the corporate market and, therefore, still unknown to many. However, it can be explained as a chain of blocks (as its literal translation) that contain information regarding digital transactions of virtual currencies, such as Bitcoin. In other words, it is a reliable record of who sent, who received, what amounts were involved and all the details necessary to establish a secure transaction between two parties.
The Supply Chain is a series of transactions and processes between different players market and business sectors, including manufacturers, purchasing, wholesale, retail, storage, transportation, points of sale, consumers, and more. With so many organizations, countries, and regulations involved, it is common for these transactions to lack transparency, which is the perfect formula for a company to suffer irreversible damage and even put the health and safety of its internal and external stakeholders at risk. Therefore, such blockchain practices help make processes more efficient and secure.
Transparency and traceability
Even though companies try to meet consumer market demands and be as transparent as possible regarding their processes, the excessive complexity involved in a Supply Chain ends up preventing or hindering this objective. Thus, blockchain acts as a facilitator, mainly by using technologies that assist in tracking, such as sensors and RFID tags.
One example of the importance of product recalls for the industry is that poor traceability can be extremely damaging, especially when people’s health and safety are at risk. Whether we’re talking about a faulty part in a car or a contaminated food ingredient, we need to know exactly where in the supply chain the contamination or defect occurred in order to remove damaged products from the market and identify whether others may have been affected.
This demand for greater transparency and governance comes from the consumer market itself. According to Nielsen, 49% of consumers are willing to pay more for products that meet high quality and safety standards. Inspired by this maxim, companies like Walmart have already started to apply blockchain to their supply chains, especially in operations involving food. This way, they can track the supply throughout the entire process, “from farm to store” almost in real time.
When we look at other markets, such as retail and luxury goods, RFID tags and sensors can indeed help track and prove the integrity and authenticity of the product and its materials. As websites and stores emerge that sell products that claim to be original, this tracking becomes even more important. Another benefit of blockchain that is applicable to all markets is the application of “smart contracts”, which consist of paying for a certain service as the steps and processes are completed along the chain. In other words, all the benefits obtained are valid for both companies and consumers.
With Blockchain, companies can transform their processes and meet the demands of the consumer market, both in terms of transparency and product authenticity. The biggest benefit is that this practice provides a comprehensive and clear view of a product's entire journey, regardless of how many countries and organizations are involved in the process until it reaches the hands of the end consumer.