Supply chain

The biggest, baddest thing in supply chain for 2020

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light blocksSupply chain has had an interesting history in the last decade. Business landscapes became global, consumers are more intelligent, markets grew, customer value became important, the last mile got shorter and speed to action became crucial.

Technology has been a key influencer for these changes to happen, and one of the technologies that is disrupting and reinventing each of these areas in supply chain is blockchain.

Globalization of supply chains dramatically happened in the 2010s due to improvements in communication and faster matching of demand with supply. Manufacturing, distribution, sourcing of materials, invoicing and returns all were significantly impacted by the increased integration of a global customer and supplier base.

While existing technologies were not enough to bring in this change, blockchain with its distributed ledger and smart contracts, shortened each of these processes. Blockchain-enabled supply chains have allowed organizations to grant better visibility to multiple levels in their supply chains, resolve disputes faster, do zero-day invoicing and improve working capital.

Add greater visibility and efficiency across supply chains

Manufacturing supply chain

Solid procurement practices and stronger relationships with suppliers should be considered a priority in the supply chain process. Some of the areas where blockchain is applied, such as supply chain financing and procure to pay, helps foster these relationships. There are fewer disputes, suppliers do not suffer due to the loss of opportunity, and suppliers decrease their risk as banks come onto the same network.

Historically, a consumer would look at price, product features and brand to differentiate many products in the marketplace. This does not work anymore. Consumers are much more conscious of what they are consuming and where it comes from. In its current state, the existing food supply chain processes could not give that information to consumers in real-time. Blockchain connects the dots. From a farmer that grows coffee beans in a small farm in Mexico to the consumer who orders a cappuccino at a café in Melbourne, provenance is our mantra.

The importance of dealing with risks in the current supply chain is further heightened by reliance on external factors such as microservices, requiring focus on core business processes leading to outsourcing practices and interdependence on partners. With multiple organizations collaborating to bring their best to create a product, the distributed inventory model will bring challenges for manufacturers, retailers and 3PLs alike. Again, blockchain plays an important role here.

Supply chain provenance

Another challenge that cropped up as supply chains became more complex, was counterfeiting. Organizations moved from QR codes to RFID to take on this challenge. No matter what we came up with, it got replicated very quickly. The spaghetti of supply chain made it difficult to identify where counterfeiting was happening. Blockchain enabled with crypto anchor verifiers help us identify counterfeit products in near real-time. The provenance of a product’s movement along with the data from the crypto anchor verifier, isolate the possible source of counterfeit and helps manufacturers react accordingly.

Given the interconnected nature of today’s supply chain, what impacts one corner of the industry is bound to create ripple effects. One small worm from a farm could spoil a truckload of mangoes being shipped. Speed to action becomes crucial at the cost of loss of inventory. In some large organizations, it would take them almost seven days in the event of an outbreak to locate the origin.

Blockchain helps to considerably shorten reaction time. Supply chain transformations through blockchain is like music to the ears for heads of supply chains . Not only did it become easy to identify and quarantine the problem, but it could also be done in less than three seconds. Blockchain improves supply chain resiliency tremendously by giving them the ability to withstand disruptive events with minimum damage.

Media supply chain

This disruption is not just in manufacturing and food supply chains, but also in industries such as media and advertising. The media supply chain currently lacks transparency into how and where money is allocated. Online ads are likely sold three or four times through intermediate players.

Blockchain-based ad buys combine technologies from blockchain and advertising to create payment transparency, verification, and enforcement of all payment terms providing a clear trail of cash flow. Marketers can follow the money from buyer to publisher, make sure everyone in the media supply chain is who they say they are, and have a direct line of sight to where and whom payment is made.

Wasted ad spend owing to fraud alone adds up to USD 51 million every day. This amounted to USD 19 billion by the end of the year in a 2018 study. The WFA predicts ad fraud will become the biggest market for organized crime by 2025, worth USD 50 billion. Blockchain used as a distributed ledger technology will change media buying as we know it by enabling parties in a network to agree on a transaction without the need for third parties or centralized control.

Today only about 30 to 35 percent of every dollar spent by the brand on advertising reached the publisher. Blockchain aims to bring this to almost 60 percent, giving higher value to both publisher and the brand.

Blockchain beyond 2020

Visibility, agility, and the ability to connect disparate data in supply chain will be the way forward for businesses. Intelligent supply chains on blockchain will enable the linking of cash flow and actions between parties. Smart contract validation can further eliminate invoice discrepancies for all industries.

Intelligent supply chains of tomorrow will provide end-to-end visibility, eliminate process inefficiencies, reduce cycle time, create new opportunities to deliver value for customers, build deeper supplier relations and deliver information quickly that can be acted on. Blockchain checks all these boxes.

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Blockchain Strategy, Advisory and Consulting

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