The Current State of Supply Networks
Before 2020 and the onset of COVID, consumers largely expected rapid, even same-day, deliveries. The pandemic exposed the fragility of this model, forcing consumers to grapple with the “supply chain” concept as delays plagued everything from basic necessities like toilet paper to electronics like smartphones, entertainment systems, gaming devices, and even essential home office furnishings. This increased awareness has fueled new demands. Now, both consumers and businesses are exploring technological solutions to strengthen supply chains and ease, or at least lessen, potential bottlenecks. However, technology isn’t a cure-all. Supply networks remain vulnerable to factors like international tensions, cyber threats, economic inflation, and even droughts that impede shipping due to lowered water levels, not to mention the numerous and often unpredictable consequences of global climate change.
Faced with these continuous disruptions, many businesses, especially those tasked with ensuring efficient supply chains, are reassessing their “lean” and “just-in-time” manufacturing strategies. They are also deeply examining issues related to the sourcing, production, delivery, and return of goods and materials. Furthermore, supply chain directors are increasingly expected to foresee and proactively manage weak spots within the supply chain. Consequently, these executives are channeling their key strategic investments into bolstering three crucial areas:1
1. Anticipating and mitigating risks in the supply chain
2. Implementing environmental, social, and governance (ESG) monitoring through end-to-end supply chain tracking
3. Fostering greater confidence in intricate, multi-participant environments
Strengthening these three factors can empower executives and their organizations to achieve enhanced transparency, verify origin and regulatory adherence, and boost brand loyalty. For many businesses aiming to optimize their supply chains, blockchain technology is emerging as a key tool. Blockchain serves as a transaction data log that operates on a shared, distributed ledger. This ledger is inherently secure against tampering and offers a dependable, shared method for documenting, validating, and observing transactions throughout complex systems involving numerous parties, some of whom may have pre-existing trust issues.
Historically, supply chain managers relied on built-in redundancy to buffer against disruptions. While some level of redundancy may still be crucial, particularly for vital supplies, technologies such as blockchain empower companies to proactively identify and address supply chain vulnerabilities before they escalate. As an example, businesses in resource-intensive sectors are adopting blockchain solutions to improve transparency and tracking, enabling them to better manage Scope 3 emissions.2 Lastly, given the diverse entities involved in global supply chains, often separated by conflicting priorities, information integrity frequently diminishes trust among participants. Technologies like blockchain can counteract these negative impacts by guaranteeing the authenticity of data and maintaining visibility during upstream transactions.