Utilising Blockchain in India’s Supply Chain Network
iasparliament
December 19, 2018
What is a blockchain?
In its simplest form, a blockchain is an accounting ledger which can store data on any real-world transaction of any kind.
The unique feature in this ledger is the decentralised style and the data encryption which is highly resistant to tampering.
This enables the blockchain to act as a trustworthy third party in applications ranging from property ownership and financial services to identity verification.
And it can also perform on public basis, such as Bitcoin, or private, with a single entity operating a closed blockchain system.
What is the advantage of Blockchain in India?
In India, blockchain can generate three tiers of impact across the supply chain network.
Improving transparency – The reason why large logistics players haven’t deployed a centralised platform is due to less transparency, enormous on-boarding effort required, and data-privacy concerns.
Blockchain could address these issues by the block chain’s plug-and-play capability which makes on-boarding less onerous.
Large players can create their own private block chains with their suppliers, which results in the automation of paperwork and due diligence.
These networks could then be repeatedly connected to each other to create exponentially larger networks, amplifying the benefits.
Also the Blockchain’s structure, combining encryption and distribution, makes data far more secure and gives each blockchain participant far more control over its data.
These capabilities increase the upside of joining a blockchain while dramatically reducing the downsides.
Dispute resolution - The present supply-chain structure makes litigation for faulty or defective supply tedious and expensive, fraught with unreliable data.
In a blockchain-enabled supply chain, each movement of the shipment can be tracked and logged in a way that all of the parties can trust, but with the data open only to them.
“Smart” contracts could then penalise parties automatically from amounts held in escrow.
Opportunities for SMEs - Estimates show that last-mile delivery accounts for 40-50 per cent of all logistics costs and SME vendors have proven their cost effectiveness in this domain.
Blockchain provides a novel solution to build trust on the SMEs by on-boarding the SME vendors onto a blockchain platform where they can be assigned reputation ratings which track their performance.
The customers could also have dozens of high-quality logistics options to choose from, all with the assurance that comes with performance track records that have been verified by blockchain.
The potential impact is twofold by enabling SMEs to have a larger share in the supply chain market as well as help to increase the supply chain market by increasing demand as the addition of new players reduces prices.
