There may never have been a “future trend” in supply chains that’s been around for longer, without yet enjoying the predicted widespread use, than blockchain technology.
But you shouldn’t let that stop you from learning more about blockchain’s uses and benefits for supply chains. If you need a little motivation, this article by CNBC touts new research that says blockchain technology will drive US$31 billion in savings in the food and beverage industry by 2024.
According to the article, those savings would be generated “through the streamlining of supply chains, efficient food recall processes and “simpler regulatory compliance”.
A Brief Explanation of How Blockchain Will Lower Supply Chain Costs
To better understand how blockchain technology, using IoT (the internet of things) sensors and trackers, can drive down costs by billions of dollars, it helps to get a better understanding of blockchain technology by itself.
Like its name implies, blockchain is a chain of blocks. Except the blocks are 1 MB chunks of digital data, and the chain is a public database that links them all together.
The data stored in a block includes, among other things:
- Date, time and dollar amount of a transaction
- Participants in the transaction (using a unique digital signature, like a user ID)
- A unique identifier to set the block apart from other blocks.
Blockchains are tamper-proof and work as a digital ledger of transactions, like those that happen all along a supply chain.
How Blockchain Will Save the Food & Beverage Industry $31 Billion
The CNBC article says the $31 Billion in savings happen through a reduction in “food fraud”. Consumers are increasingly aware of and demanding of knowing where their food comes from and what it contains.
The article cites a recent example of horse meat being detected in European food products, even though none was listed in ingredients labels. Tracing the source of the omission proved costly due to a variety of different record-keeping processes, paper-based systems and other investigative hurdles.
Had blockchain technology been used in supply chain management systems along the food products supply chain, not only would the source of the omission have been immediately identified, the effort to add the horse meat without listing it would not likely have happened in the first place.
For more information about finding savings in your supply chain, check out our article “3 More Tips for Supply Chain Cost Reductions”.