Last month, I gave a talk at the SCMAP (Supply Chain Management Association of the Philippines) Conference, where we discussed new technologies affecting the development of supply in our country. We remember that during the time of COVID-19, the supply chain became an integral part of ensuring the delivery of necessary food and medicine to the aggrieved parties.
The COVID-19 pandemic delivered a striking wake-up call to the world, emphasizing the critical role of effective supply chain management. We all experienced the frustration of delayed deliveries and empty store shelves as the pandemic disrupted global supply chains. From toilet paper to electronics and home office furniture, the pandemic laid bare the intricacies of these systems. It also spurred an urgency to find technological solutions to enhance supply chain transparency and mitigate bottlenecks.
Supply chains are notoriously vulnerable to a wide range of factors, from geopolitical tensions and cyberattacks to environmental changes and unexpected stockouts. This is where blockchain technology comes into play.
Blockchain, often associated with cryptocurrencies, is essentially a record of transactions on a shared, tamper-evident ledger. It provides a trusted and reliable way to record, validate, and view transactions across complex systems with multiple participants. This technology is increasingly seen as a game-changer for enhancing supply chain effectiveness.
To understand how blockchain benefits supply chains, we must first recognize that supply chains are intricate networks of interconnected businesses. Each participant adds value to a product or service as it moves through the network. Blockchain technology can record these transactions on a shared, immutable ledger, enabling the seamless exchange of data and value among participants. It serves as a single source of truth and can enhance transparency, visibility, and traceability across the entire supply chain.
Blockchain’s potential benefits are significant. It can reduce supply chain risks, increase visibility, and build trust within the complex supply chain ecosystem. Moreover, it complements existing systems and can interface with emerging technologies like the Internet of Things (IoT), smart contracts, and artificial intelligence, further enhancing security and efficiency.
AMPLIFICATION OF BLOCKCHAIN USE DURING THE COVID-19 PANDEMICPredicting Supply Chain Risk: The pandemic highlighted the need for predictive risk management. Blockchain enables real-time monitoring and risk prediction, helping supply chain professionals proactively address potential disruptions.
ESG Tracking: Environmental, social, and governance (ESG) tracking became a critical aspect of supply chain management. Blockchain’s transparency and traceability features facilitate the monitoring and reporting of ESG data.
Enhancing Trust: As the pandemic revealed vulnerabilities in supply chains, building trust among stakeholders became paramount. Blockchain’s tamper-evident ledger ensures the authenticity of information and promotes transparency.
Reducing Supply Chain Risk: Blockchain offers a proactive approach to detecting and mitigating risks, reducing the likelihood of supply chain disruptions.
Increasing Visibility: The transparency provided by blockchain technology enhances visibility across the supply chain, enabling better decision-making and risk management.
Enhanced Security and Efficiency: Blockchain can interface with other emerging technologies, such as IoT, smart contracts, and artificial intelligence (AI), to enhance the security and efficiency of supply chain operations.
Traditionally, supply chain leaders had to rely on redundancy as a safety net to mitigate disruptions. While some redundancy remains necessary, blockchain offers proactive risk detection and mitigation capabilities, ensuring transparency, traceability, and trust. This technology is particularly beneficial for controlling emissions in resource-intensive industries, making the complex supply chain ecosystem more resilient.
THE ROLE OF BLOCKCHAIN IN THE POST-PANDEMIC WORLDAs we move into the post-pandemic world, the lessons learned from COVID-19 continue to shape supply chain strategies. Blockchain technology plays a pivotal role in this new landscape.
Resilience: The pandemic exposed vulnerabilities in global supply chains. Blockchain provides resilience by enabling companies to proactively detect and mitigate risks. It acts as a safety net against unexpected disruptions, ensuring the continuity of supply chain operations.
Transparency and Traceability: Supply chain stakeholders, including consumers and regulators, now demand greater transparency and traceability. Blockchain’s tamper-evident ledger guarantees the authenticity of data, making it an ideal solution for meeting these expectations. It provides an immutable record of every transaction, from source to delivery.
Trust-Building: Trust is a valuable currency in the post-pandemic supply chain. Blockchain builds trust among all stakeholders by ensuring data integrity and transparency. This trust extends not only to business partners but also to end consumers who seek authentic information about the products they purchase.
Efficiency and Optimization: Beyond risk management, blockchain enhances supply chain efficiency. It can seamlessly integrate with other emerging technologies like the IoT, smart contracts, and AI. This integration streamlines processes and optimizes the flow of goods, services, and information.
Meeting Environmental Goals: With increased focus on environmental sustainability, blockchain helps control emissions in resource-intensive industries. It allows for the accurate tracking and reporting of ESG data, aligning supply chain operations with environmental goals.
In the post-pandemic world, businesses and organizations must adapt to a new normal where resilience, transparency, and trust are paramount. Blockchain technology offers a strategic advantage in achieving these objectives, transforming supply chains into resilient, efficient, and trustworthy networks that can thrive in the face of future challenges. It’s not just a technological solution; it’s a blueprint for a more resilient and transparent supply chain ecosystem. With SCMAP leading the charge, I look forward to a supply chain industry prepared to face future challenges.
Dr. Donald Patrick Lim is the founding president of the Blockchain Council of the Philippines and the lead convenor of the Philippine Blockchain Week. He is also the Asian anchor of FintechTV.