How Blockchain Benefits Supply Chains and Startups


The COVID-19 pandemic highlighted gaps in supply chains worldwide, spurring organizational efforts to make supply chains more resilient and transparent. Every industry was hit, and every business witnessed its supply chain fall short in meeting market needs in a time of crisis.

Globally, supply chains are fragmented, and businesses operate in silos. Blockchain is one technology that can introduce standardization, transparency and alignment for accelerated global trade.

The World Economic Forum has recognized the potential of blockchain technology to improve global supply chains and kickstarted an effort with 100+ experts and organizations to “co-design an open-source toolkit which will streamline the deployment of blockchain throughout a broad and diverse sector.”

The project will involve WEF’s multistakeholder community of large shippers, supply chain providers and governments to design governance frameworks to build on key uses of blockchain in port systems in a strategic, forward-thinking and globally interoperable manner.

WEF calls the project Redesigning Trust: Blockchain for Supply Chains, and it’s the work of the Centre for the Fourth Industrial Revolution.

This confirms something- blockchain has possibilities for supply chains worldwide.

Related Reading: Are Metaverses Happening? The Potential for Startups

The Opportunity for Startups in a Moment of Chaos

According to Crunchbase numbers, 2021 saw $11.3 billion in funding and was a banner year for venture-backed supply chain management companies. This represented a twofold increase from the previous year and a significant increase from the previous all-time high of $9.1 billion in 2019.

According to Crunchbase, the trend will continue in 2022 and beyond as it reflects the effects of the pandemic that disrupted every aspect of the supply chain and a building acceptance of technology in an industry primarily run on paper, pen and spreadsheets.

In a moment of chaos, startups take the lead and introduce risky and potential new paradigms and technologies. Every innovation requires some disruption, and startups are fast to disrupt and introduce innovation.

The supply chain problems are not only noticeable now but urgent. They are being experienced by organizations and noticed by investors, which means this is an opportunity for startups to introduce technology that solves this glaring problem.

The funding opportunities are very much present for startups that can help organizations make strides in the supply chain, most prominently with blockchain.

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How the Best Supply Chains Worldwide are Figuring out Blockchain 

An HBR research studied seven major U.S. corporations and leaders in supply chain management that are figuring out how blockchain can solve their challenges. The companies – Emerson, Hayward, IBM, Mastercard, Corning and two others that wish to stay anonymous operate in disparate industries- retail, manufacturing, financial services and technology.

Some of them are considering blockchain, a few are conducting pilots and others have moved even further, working with supply chain partners to develop applications. The research leads us to understand the benefits of blockchain and its main function in the supply chain vs. its function in cryptocurrencies.

For crypto networks designed to replace fiat money, the primary function of blockchain is to allow an unlimited number of anonymous users to transact privately and securely within themselves without a central entity.

However, the primary objective for supply chains is to “allow a limited number of known parties to protect their business operations against malicious actors while supporting better performance.”

HBR reports that “successful blockchain applications for supply chains will require new permissioned blockchains, new standards for representing transactions on a block, and new rules to govern the system- which are all in various stages of being developed.”

Here are the applications of blockchain studied companies are applying:

  • Enhancing traceability – A large pharmaceutical company in the study is collaborating with its supply chain partners to use blockchain to identify and trace prescription drugs to protect consumers from stolen, counterfeit and harmful products and comply with the U.S. Drug Supply Chain Security Act of 2013. The benefits of blockchain in enhancing traceability include efficiently recalling a faulty product by tracing the partners, product, suppliers and shipment batches associated, monitoring the quality of perishable items, ensuring the authenticity of a product and more.
  • Increasing speed and efficiency and minimizing disruptions – Emerson has a complex supply chain with limited visibility and multiple components across customers, suppliers and locations. Such supply chains contend with long, unpredictable lead times and a lack of visibility. A tiny delay or disruption in a part of the chain can lead to excess inventory or stock-outs in other parts. With blockchain, participants can share inventory flows and allow each company to make decisions using commonly available complete information. Walmart Canada already uses blockchain technology with the trucking companies that transport its inventory to synchronize logistics data, track shipments and automate payments.
  • Improved financing, contracting and international transactions – When blockchain allows sharing of inventory, information and financial flows among firms, significant gains are possible in financing, contracting and conducting international business. Blockchain can reduce information asymmetry for banks around borrower firms, their assets and liabilities. It can also improve accounts payable management, which still has gaps even though ERP systems have automated many steps. Finally, cross-border trade requires manual processes, physical documents and intermediaries, and many checks and verifications, which can better be handled with a blockchain.

Related Reading: How Has the COVID-19 Pandemic Accelerated Blockchain

Potential Advantages of Blockchain in Supply Chain Transformation

Blockchain can offer higher supply chain transparency and reduced cost and risk across the supply chain. Here are the clear benefits of blockchain in supply chain management:

  • Ensure that corporate standards are met by improving the traceability of materials in a supply chain
  • Reduce losses from counterfeit products and prevent gray market trading
  • Increase visibility and compliance over outsourced contract manufacturing by bridging communication gaps and eliminating transfer data errors
  • Reduce paperwork, manual intervention and administrative costs
  • Solidify corporate reputation by providing transparency of materials used in products
  • Increase credibility and public trust of data shared
  • Reduce potential PR risk from supply chain malpractices
  • Engage stakeholders with higher visibility across the supply chain

Blockchain makes important promises for the supply chain management industry. Reach out to us at KiwiTech to speak to our Blockchain consultants about your next big project.

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