Since its inception in 2008, blockchain technology has gained significant traction in all areas of business, and the supply chain is no exception. According to a Markets and Markets report, the market for blockchain technology in the supply chain was worth approximately $253 million in 2020 and is poised to generate revenue of around $3.2 billion by 2026.
Blockchain is too complex for supply chain implementation.
Fact: While blockchain innovation might seem mind-boggling at first, it’s anything but difficult for supply chain implementation. Blockchain platforms and solutions have come a long way to cater to the needs of the supply chain industry. Businesses can utilize blockchain without extensive technical expertise thanks to these platforms’ user-friendly interfaces and tools. Companies like Walmart have successfully implemented blockchain in their supply chain, improving traceability and reducing product recalls. Use cases across all industries, such as automotive, food and mining, serve as evidence.
Blockchain is only relevant for large corporations.
Fact: Blockchain technology is agnostic to the size of the business. In fact, it can give small and medium-sized enterprises (SMEs) a competitive advantage. (A small coffee shop could use a blockchain-based supply chain management system to ensure the quality and authenticity of its espresso beans.) SMEs can utilize blockchain to enhance their credibility, improve operational efficiency and gain access to new markets through increased supply chain visibility.
Smart contracts are legally binding.
Fact: Smart contracts automatically enforce rules and regulations in contractual agreements between parties. While they have a spread across various industries, including financial transactions and supply chain management, they are not necessarily legally binding. In other words, if there is a disagreement among the parties, enforcement of the terms of the agreement may remain subject to judicial intervention.
Blockchain can solve all supply chain problems instantly.
Fact: Blockchain is a powerful technology, but it’s not a silver bullet for every supply chain challenge. The decision to implement blockchain requires careful planning and consideration. On the tech side, it will also require collaboration and integration with existing systems. Blockchain can address specific issues such as counterfeit goods and supply chain tracking. However, it is crucial to identify the particular problems that can benefit from blockchain technology and develop targeted solutions. The number of entities participating in the ledger and complexity of business logic are some factors to consider before deciding to implement blockchain in your business.
Blockchain implementation is prohibitively expensive.
Fact: Although the implementation of blockchain entails a cost, the longer-term benefits realized often outweigh those initially incurred. In the supply chain world, such blockchain benefits can be seen in terms of reduction/elimination of intermediaries, removal of paperwork, and prevention of fraud. For example, inventory accuracy is one of the burning problems in the supply chain industry. APQC research shows a $106 difference between top-performing and bottom-performing organizations regarding inventory value per $1,000 in revenue. To put things in perspective, for an organization with revenue of $5 billion, this difference translates into $530 million worth of inventory! On the other hand, a blockchain application for inventory tracking will cost around $200,000.The immutability and real-time updates of blockchain gives visibility across all parts of value chain-reducing the pile of inventory stored in excess.
Blockchain is a cloud-based database.
Fact: While it’s true that both blockchain and cloud platforms store data, there is a difference in structure and organization. The biggest difference lies in the fact that cloud-based databases are controlled by a single entity like Amazon and Microsoft, whereas the data on blockchain is distributed across the network of nodes. Also, blockchain uses Merkle Tree principles as each block contains cryptographic hash of previous node making it a chain of immutable data.
In the rapidly changing and evolving landscape of supply chain, it is important to understand the new technologies and to separate their myths from reality. Bristlecone, with its 25 years of expertise in digital transformation in supply chain and technology solutions, can help navigate the complexities of these technological implementation.
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