At United Global Sourcing, we’re expert communicators and value honesty over anything else. We want you to feel comfortable working with us and trust that we will deliver on our promises. With that being said, we’re digging into blockchain, the technology that’s taken the digital world by storm. It started being used with Bitcoin, but its protocol is now being used across various industries. Experts in the field are saying that blockchain is the best innovation since the internet. At UGS, we would have to agree. The technology is a great way to track, record, and confirm transactions at every stage of a supply chain. At the end of the day, blockchain may seem too good to be true. That’s why, in this post, we want to share four barriers the supply chain industry must break down to adopt the technology.
Four Blockchain Barriers for Supply Chains
It’s easy to see the vast potential blockchain brings to global supply chain management. The technology will help the industry evolve, making it safer and more transparent. However, there are some barriers that must be broken down for the industry to adopt blockchain entirely. Here are those four barriers:
Barrier #1 – Adoption
If not the entire supply chain industry, the majority have to adopt blockchain for it to be effective. It’s not enough for one, two, or three supply chains to adopt this technology. Yes, one could implement blockchain across their supply chains, filling in the gaps with the current system, but it will become more tedious than if the manager stayed with their current system, not utilizing blockchain. As with any new technology, there is “leap” moment where the industry takes the risks and the step into the unknown. A majority of the supply chain industry is excited about blockchain, but they’re reluctant to make that leap.
Barrier #2 – Technology
Blockchain itself is a magnificent solution to hidden ledgers and shady transaction tactics. However, the technology must be implemented across the industry and effectively used. Part of that implementation is bringing every single touch-point in the supply chain up to speed to utilize blockchain. Supply chain systems will need to make an upfront commitment to implement other technologies that allow for the entire chain to function using blockchain. In the eyes of the industry, this is relatively expensive. If this endeavor is funded, than the questions revolve around scalability.
Barrier #3 – The Gap
Yes, blockchain is a brilliant technology, but it does create a gap between the digital ledger and the reality of transactions. Implementing blockchain certainly can resolve a lot of current recurring issues in the supply chain industry, but it’s not foolproof when we look at the reality of the industry. Blockchain is able to track, record, and confirm transactions, but we still have a variable that cannot be digitized: humans. The accuracy between the ledger and what’s actually happening in reality is a concern.
Barrier #4 – Colluding
Blockchain creates a safe, transparent ledger of transactions, but it doesn’t stop people from conspiring outside of the technology. To further address barrier three above, those who want to extort the system will find a way to do so. In most cases, it cannot be completely eliminated. A concern for the industry is how nefarious activity is handled after the implementation of blockchain. Blockchain changes the global supply chain landscape quite a bit, and not knowing how supply chain managers will protect themselves is daunting.
The Advantages of Blockchain
As with any system, whether it be politics, capitalism, or a supply chain, there will be a percentage of it that causes issues. This is a given in any system. Nonetheless, blockchain is a technology that will offer a wide range of benefits to the global supply chain industry as whole. Yes, it may present some new problems to be solved, but at UGS, we have the confidence, knowledge, and experience to find the solution.
The advantages of blockchain heavily outweigh the drawbacks.
Your Global Supply Chain Management Experts
At United Global Sourcing, we value quality and communication above all else. We strive to deliver on our promise and help you find the absolute best supply chain solutions around the world. Whether you need a manufacturer or supplier, we can help you. As blockchain becomes more prevalent in the supply chain industry, we will work to stay at the edge of innovation while utilizing time-tested strategies to get you the best results possible.