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Blockchain In Supply Chain Management

If you had enough of buzz about Satoshi and bitcoin, then let’s delve into the philosophical use of blockchain, the technology that gave birth to Bitcoin, Ethereum and hundreds of other coins. Although Blockchain has been predicted to revolutionize the financial sector with the introduction of the crypto currency, let’s not ignore the use of blockchain for tracking the supplies that comes to our distribution center from cross countries.

Blockchain is a distributed digital ledger that provides an immutable and encrypted entries. blockchain is derived from the word “block “and “chain”. Block here means the validated and immutable transactions and chain means the linking of those blocks of transactions. That means the transactions entered once cannot be reverted. Only way to revert the transaction would be to add another correcting entry making the tampering of the transactions within the ledger virtually impossible.

So, you might be wondering, how we might use this in supply chain? Let consider an example of car manufacturing company, implements a blockchain based system. Several stakeholders in car manufacturing process could be OEM (original equipment manufacturer) , car manufacturer like Honda , third party logistics company that organizes the transit, a trucking company to bring cars from the port, and the car dealer that sells cars to customers.  

Here in the picture we see that the Car body is manufactured in the manufacturing plant, which is then send to the harbor ship for shipping. Cars are then finished in harbor, where we can upgrade to new tires that came from China. Then we transport to another location let’s say Amsterdam where we assemble the sensors and electronic and then are transported to the distribution center via ships, trains etc. You must have already seen the complex lifecycle of the distribution of the car from one country to the another.

The complex manufacturing of the car involves the key components from the various parts of the world. Each vendor has different way of tracking the component, that means a lot of documentation and papers that has to be carried during the shipping of the components and the vehicle itself.  Most of them are handwritten and hand carried. There are dire possibilities of losing the handwritten documents along with its meaning after storing it for long time.  Also, hand carried paper doesn’t give us real time information about where our parts lie! Also, during the transport of vehicle / parts we don’t know what the condition of the vehicle is? Maybe the shipping truck got into an accident? Paper trail documentation wouldn’t be able to track the shipping mishap either. Think about the mileage fraud /Tax fraud? How can we ensure that in a handwritten document?

Immutable records from the Blockchain is the way to go for that problem. We can use the VIN to track the vehicles from manufacturing to the dealer. In the Blockchain, we can keep those immutable data about the car, like all the logistics record, and all the technical records. Logistics record could be the location of car, estimated time of arrival, status in which it is delivered. Technical records include the mileage, damage record etc.  This is similar to having a visibility of the pizza status as you put in the order at Dominos where it tells if it is being prepared, kept in oven or ready to be shipped except the data for car manufacturing in the blockchain cannot be manipulated. Remember that everything in Blockchain gets added as transaction. Even attempt to tamper the record as well. This enables for the end to end visibility of the vehicle for the customer and also the distributor. So, this creates one truth about the vehicle which guarantees the confidence in the end user.

After the vehicles have been shipped ,with the records of the cars in, authorities can use to proceed with the inspection faster, as they have some background data about the vehicle. Also, the provenance of the parts could be identified anytime as well since we have all those assembly related data in our blockchain network. This aggregate documentation can be used for the smart contract between the customer and the manufacture ensuring the quality of the work.

All in all, digitizing the car supply network along with manufacturing ensures the visibility of the stakeholders into the transaction log, making the log immutable in the blockchain system. With the digital ledger of transactions about the parts we can ensure that the right parts for the vehicle was used during the assembly at the harbor ensuring the quality of work. Also with the IOT enabled sensors during the shipping , we can guarantee the condition of the vehicle during the delivery process. This also helps to maintain the recalls and defects and we can track where the defects are emerging from, reducing the overall cost for this manufacturing process.

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Anil
Anil is an avid learner and a technologist who likes to learn and create products that empowers people.
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