Blockchain and Supply Chain Management

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Blockchain paradigm is changing the way many goods are transacted between business and in the markets.

This post brings you an executive comparative of the differences in key aspects between the traditional supply chain and a Blockchain-based supply chain, echoing an approach from the insightful article about Blockchain and SCM recently published by the expert in SCM transformation Mr Roy Sanjeev, Global Transformation Leader in Chevron | E&Y | ExxonMobil.

 Traditional Supply ChainSupply Blockchain
LedgersProprietary of every link. Available only for the owner.Shared between the links. Available to any link with credentials.
Information FlowIntermediated. Every link of the chain is a bottleneck for the information flow.Disintermediated. Information flows openly in a permissioned manner.
Assumed RiskIncreases in every link.Is reduced as more links adhere to the ecosystem.
AgilityEvery link increases trust erosion and technology integration costs.As links go Blockchain the trust increases and technology integration costs decreases.
Relationships between stakeholdersBilateral and chained.All connected.
NotarizationInformation of transactions needs to be verified as it flows from link to link, through the use of test certificates, bills of lading, letters of credit etc.Information of transactions across the ecosystem resides inside the Blockchain system as every transaction happens on a distributed ledger perfectly notarized.
Title transferEasy for any property whose ownership is controlled by the Blockchain.
TraceAuthenticity of transactions is compromised by the lack of open and trustworthy information provided by links.Transactions can be traced with authenticity throughout all the stakeholders.
IrrevocabilityTransactions may be contractually manipulated or distorted to suit one party, increasing the risk and untrust.Transaction histories are shared with the whole ecosystem and are always available, eliminating the chances of being hacked also eliminates the chances of being manipulated or distorted.
Smart-contractContracts agreed don't mean be complied with, so the focus is not only in the partnership but on compliance and the need to “check the checkers”.Smart Contracts can not be bypassed so there is no need to focus on compliance.
TruthMultiple sources of truth not always sync.
Single source of truth available to all actors in the ecosystem.
Audit TrailPartially and atomically recorder by every link related to its transactions with other links.Recording and bringing information from each and every transaction to all actors in the ecosystem.

“Leading experts are predicting the Blockchain technology adoption to be in the following chases (1) early adoption during 2016-2017 (2) Growth during 2018-2024 and (3) Maturity from 2025 and beyond. It is important for leading supply chain strategists to form a POV on the applicability of the Blockchain technology to their own supply chain from a strategy perspective”.  Roy Sanjeev.

Source: Referred article