The Role of Blockchain in Supply Chain Traceability and Transparency

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INTRODUCTION

Supply chains are usually very large, intricate, and require many parties’ participation, making it difficult to manage traceability and transparency. Lately, the popularity of the technology in the case of blockchain will prove to be more relevant than ever. Blockchain technology is very promising as it records and stores every action taken on a unit product from its origin to the retailer and the customers.

Suppliers, manufacturers, retailers, and online marketplaces can now trust the real-time flow of information without fear of compromising the integrity of the shared information due to breach of privacy. Every single movement or modification causes an entry and that entry is made by reference to or in connection with an earlier entry housed in the system hence making the system secure. This technology is most often used in the areas where there is a need to maintain the sourcing, legitimacy and movement of goods across borders, like food products, drugs and high-end products.

Using blockchain enhances the possibility of obtaining full visibility of the supply chain since all the stakeholders including the suppliers and the consumers are able to substantiate the absolute confirmation of the products in terms of authenticity and ethical sourcing. This increases the consumers’ trust and makes it possible for organizations to comply with transparency regulations.

• ENHANCING PRODUCT TRACEABILITY:

The use of supply chains in conjunction with blockchain technology permits complete accountability and visibility of each product at each point within the supply chain. All transactional and movement patterns are recorded onto the system making it easy to have a chronological history of where a product has been and the date it was located there. This is effective because it lowers the amount spent in searching for a finished product, especially in times of recall.

This is especially true in the case of the food industry, where one can track the progression of ingredients all the way from the farm to the market thanks to block chain technology. This allows for contamination or faulty products to be traced and rectified within seconds thus saving companies from losses.

When it comes to Prescription drugs for instance, the counterfeit drug market can be wiped out through the aide of blockchain technology, whereby, every supply chain of a medicine will be confirmed safe from the supply chain of the manufacturers through reliable channels. This means that users can only get original products thus preventing health risks.

• IMPROVING SUPPLY CHAIN TRANSPARENCY:

The technology of block-chaining maintains a record of every transaction and movement of goods in the supply chain. The people involved either – the manufacturers, the suppliers, the distributors and the consumers – can see and verify the information increasing the confidence and trust in the processes.

For example, in sectors where there are ethical concerns on the sourcing of the supply, clothes or diamond blocks can know the sustainability of procurement concerning the products. For instance, one can follow the operations of the diamond mines, and they can ensure that there is no conflict, or garments were made in workplaces that were not humane.

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Regulatory and compliance requirements can be also met because of the level of transparency, and thus improves the processes of carrying out the audit and lessens the internal fraudulent risks within the supply chain management.

• REDUCING FRAUD AND COUNTERFEITING:

Due to its distinctive characteristics of being decentralized and hard to modify, Blockchain technology comes in handy to help deal with issues of supply chain fraud and counterfeiting. Information that has been recorded in the blockchain is irreversible and this acts as a great advantage as all transactions will have a concrete background.

In particular luxury and electronic goods, where imitation dominates, consumers can be assured their purchases are only from genuine items since they are tracked over a large supply chain in an impenetrable network. On the blockchain, every item could be embedded with an exclusive digital identity, enabling consumers to check its validity at any level of the distribution chain.

By preventing counterfeiting, not only are the consumers’ interests served but also the enterprises’ interests are advanced in that they do not lose their reputations and profits on counterfeited items.

• FACILITATING SUSTAINABILITY AND ETHICAL PRACTICES:

The use of blockchain technology contributes largely to sustainability and ethical business practices within all supply chain centers. They show that businesses care about ethical sourcing, fairness in hiring, and operations that are not harmful to the environment by recording the movement of a product.

For example, blockchain can facilitate carbon measurement and reporting system for a product or ensure that production materials used will be sourced responsibly. This is gaining traction and fast becoming a requirement as consumers and regulators become more and more interested in the social and environmental impacts of companies.

Building organizations Whose aim is to supply validated evidence regarding sustainable practices is a solution to the moral quest of consumers who want more of such goods.

CONCLUSION

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The supply chain is benefiting from the incorporation of new technologies and tools provided by the Internet as well as decentralised trust systems such as Blockchain. Businesses can also ensure the legitimacy of their products, combat fraudulent activities, and facilitate responsible and ethical business through secure and tamper-proof recording.

Clearly, as the research on the blockchain expands, it will focus more on enhancing supplies chain practices. These fast growing practices of trust, transparency and use of credible information in operational sectors will therefore benefit with advancements in Blockchain.