Improving the Supply Chain

From raw materials to finished products, supply chains process, store, and move almost everything we interact with every day. Supply chains are based on the cooperation of all of the participants required to move products from producers to customers. They must have the ability to inmediately restructure in response to rapid changes in environment, economic constraints, and demand. Supply chains are good examples of decentralized autonomous networks which organize distributed activities at vast scales.

Supply chains are facing  pressing problems today:

• Inefficient Allocation of Resources. Only 75% of the supply chain assets are being used at any given time. This huge network of factories, warehouses, ships, trains, planes and trucks is suffering of significant excess capacity and their information systems are not able to disclose it preventing resource optimization.
• Risks Management. Supply chain organizations find difficult to measure their systems performance of and lack of competent personnel to optimize processes. Enabling such optimization can easily lead to efficiency gains of 5 to 10%.
• Lack of Liquidity. At any given moment, there are 3.5 trillion euros tied up in net working capital in supply chains. Working capital optimization is a critical need for supply chain participants. Optimizing its use will improve the liquidity of companies, reduce financial costs and improve their leveraging capacity.
• Disruptive Change. Disruptive pace of technological change presents huge risks for supply chain participants, forcing them to increase their global agility, transparency and efficiency to quickly respond to sudden shifts affecting today’s markets.

These challenges represent a significant opportunity for improvement. Blockchain technology provides tools capable of improving the economic, organizational and management aspects of these logistics systems. Its decentralized nature is ideal for handling information, financial assets and transactions among participants without needing intermediaries intervention.

The application of blockchain solutions will determine a better quality, homogenization and accessibility of shared data, while preserving privacy where appropriate. They are well-suited to address the problems facing supply chains and eliminate the inefficiencies that hold back innovation and growth.