A recent report by the Economist Intelligence Unit has revealed a shortfall in the ethical performance of major corporations. Flaws have been found in how these corporations manage their supply chains, with less than a third of organisations having addressed issues, such as ethical breaches or supply chain corruption, with their suppliers.
This is concerning, considering the recent supply chain problems that the manufacturing industry has seen—for example, with salmonella in baby milk and E. coli in romaine lettuce hitting the headlines in the food and beverage sector, and with aviation battling a raft of financially damaging supply chain challenges.
In this landscape, trust — or rather a lack of trust — threatens to become a major issue for manufacturers that want to earn and maintain customer loyalty. In an environment where over half of consumers are willing to pay a premium for services from companies promoting social responsibility, the time is ripe for manufacturers to prioritise supply chain transparency.
How can the manufacturing industry do this while still remaining efficient, and enabling growth? What’s more, can blockchain play a role?
Blockchain’s role in the supply chain
Blockchain is a promising technology with high potential to transform the manufacturing industry, in particular, the management and auditing of supply chains. At a time when companies are dealing with complex and non-integrated supply chain networks, this relatively new technology has the potential to resolve some of the major challenges of this increasingly interdependent environment.
Blockchain can increase visibility throughout the entire supply chain, decreases administrative costs and improves traceability. As an immutable record of events without a central authority, the technology is hailed as the breakthrough innovation that could prevent supply chain scandals in the future. This is because blockchain acts as a distributed ledger, and because no one party can manipulate it to their own advantage.
The theory goes that because each party in a supply chain has a copy of the blockchain that they can access locally, no one has to log into anyone else’s system to enter data. No one has to rely on emails to keep paperwork in order, and when an event occurs—for example when a new order is received or a shipment is delivered—all parties can be notified automatically.
Some businesses are already putting blockchain to work to great effect. For example, MIT is building a platform that organisations can use as a blueprint for blockchain applications, meanwhile IBM has launched a service that allows businesses to use blockchain to improve their record-keeping. Toyota, for one, has already been experimenting with IBM’s solution, to see how it might be able to use blockchain to track high-value items through its supply chains.
Likewise, Everledger is looking at using blockchain technology to help trace where diamonds entering the market have come from, their authenticity, and whether they may have been linked to forced labour, violence, or corruption. Furthermore, in agriculture, Deloitte predicts that farmers will soon be able to record crop data via blockchain. In a recall, this means that they will be able to quickly match tainted products to supply chain records, and therefore accurately trace the size and expense of the process.
A standalone solution to the supply chain head ache?
While blockchain in the supply chain is very much in its infancy, this shouldn’t be considered as a standalone innovation. Blockchain is certainly a powerful tool with great potential, but it can‘t single-handedly bring transparency and accountability to the supply chain.
Blockchain will be at its most powerful when it’s combined with other solutions, such as a business’s existing enterprise resource planning (ERP) system. Because of an ERP system’s ability to integrate with multiple platforms, and filter relevant data, blockchain can be seen as a new plug-in tool that can help expand analytical possibilities and give users a more comprehensive view of what’s happening in their business at any one time. Ultimately, this will enable better and more accurate decision making.
Testament to this, is Walmart’s recent experiment, where the grocery chain integrated blockchain into it’s ERP system to track the progress of a single mango from tree branch through to shipment, and eventually to warehouse. While the blockchain provided a ledger of the mango’s progress, the ERP system used that data to produce a single source of truth for business users.
The future is transparent
With blockchain technology at their fingertips, supply chain managers can bring extended visibility and clarity to their operations. And that’s especially the case if the blockchain is communicating effectively with an intelligent ERP solution.
We are living in a world where businesses are coming under increasing scrutiny, where customer trust counts for everything, and where the ability to quickly demonstrate product provenance is vital. The transparency and incorruptibility of blockchain makes this new technology a revolutionary force for the supply chain.
What’s more, when integrated with an ERP system, this technology will provide business leaders with real-time data—straight from a mango tree, a diamond mine, an RFID chip in a warehouse, or a shipping facility. Welcome to a whole new world of actionable insights that can support business growth.
Sourced by Terri Hiskey, VP product marketing, manufacturing, at Epicor Software Corporation