The digital supply chain is one of the most popular methods of organization for resources, assets, people, and inventory transfers. But what challenges does supply chain face and how they can be solved with the blockchain technology?

1. BLOCKCHAIN
AS THE BACKBONE
OF
DIGITAL
SUPPLY CHAINS
fluence.sh

2. The digital supply chain is one of the most popular methods of
organization for resources, assets, people, and inventory transfers.
It is based upon modern web technologies to increase efficiency,
reduce costs, and provide greater income.
The 2018 economy is famous for its complex supply chains. The
process of product transfer has become more complicated in
recent years.
Let’s explore the trickiest challenges faced by the digital supply
chain.

3. Challenges Faced by Digital Supply Chains
In 2009, IBM’s global survey involved supply-chain leaders (CSCOs) to
discover the common challenges they were faced with.
In the picture, you can see the top 5:
● cost
● visibility
● risk
● customer needs
● globalization

4. In 2017, the global supply-chain report Eyefortransport (EFT) showed that
visibility remained the main problem of the digital supply chain. Through the
survey, it was found that the situation had gotten worse in 2017 in
comparison to 2016:
We should take into consideration the fact that giant companies like
Amazon, Adidas, and Toyota took part in the survey. Thus, this indicator is
expected to be lower among less-developed participants.
Challenges Faced by Digital Supply Chains

5. The fact that these problems continue nowadays means a lot of
digital supply chains are experiencing challenges of cost, speed, and
quality. We can mention such inefficiencies as:
● a poor level of transparency because of data discrepancies
or even an absence of data;
● manual execution of many operations, which often slows the
work process;
● unneeded paperwork that consumes a lot of time and
resources;
● insufficient interaction;
● a lack of information concerning the life cycle of a product
and its transport data.
Challenges Faced by Digital Supply Chains

6. Blockchain has been one of the buzziest words from its very
inception. It has deserved this amount of attention because of its
revolutionary role in many different areas.
What Is Blockchain?

7. Check out the advantages of blockchain integration into any business sphere:

8. What is Blockchain?
Blockchain technology can be used in any type of supply chain in
which some sort of transfer of ownership is present.
The blockchain boom assists in overcoming these complex issues
in different industries. Finally, new technology is making the supply
chain transparent, streamlined, and operational.

9. Companies gain a real-time digital root (or ledger of transactions and
movements) for all participants in their supply-chain network. The benefits
you gain will save you time, money, and effort on several fronts.
This can help ensure smoother processes, make lead times shorter,
decrease delays, reduce redundancy, strengthen partner relationships, and,
as a result, make your customer much happier.
The blockchain model governs product transfer and modernizes supply-
chain management. Its popularity has increased since 2016 among CSCOs,
which can be proven by the data below.
How Can Blockchain Solve Current Problems?

10. How Can Blockchain Solve Current Problems?

11. Thus, successful blockchain application in these areas has changed widespread perception:
How Can Blockchain Solve Current Problems?

12. Blockchain suggests a set of advantages in contrast to the
traditional model, including the IT arena and analytics
capabilities.
Let’s analyze the most essential areas.
How Can Blockchain Solve Current Problems?

13. Traceability
Blockchain technology optimizes the supply chain and provides the possibility to track
every single stage of delivery. If data is recorded in a block/ledger, it can’t be changed.
The distributed-storage feature decreases the probability of cyber attacks.
A consensus of chain participants provides validity that excludes the necessity of a
middleman in the chain. This makes data traceable and visible to each player.
Additionally, automatic RFID tags or QR codes can record information related to a
product. They are helpful in tracking delivery location and date. Logisticians can trace a
product by running the program. A smart contract shows the status and data related to
stage of delivery.

14. Security
Blockchain is a sequence of blocks, or distributed ledger, in which every
participant possesses an complete copy of the data. Nothing can be
changed without the permission of all participants. Due to access rights, the
information must be private. This makes it hack-resistant.
The data is available thanks to the cloud and global network. If there are any
special kinds of data, the owner has to approve access to them.
Plenty of opportunities for creating new, specialized usage of this technology
result from decentralized architecture.

15. Blockchain is a sequence of blocks, or distributed ledger, in which every
participant possesses an complete copy of the data. Nothing can be changed
without the permission of all participants. Due to access rights, the
information must be private. This makes it hack-resistant.
The data is available thanks to the cloud and global network. If there are any
special kinds of data, the owner has to approve access to them.
Plenty of opportunities for creating new, specialized usage of this technology
result from decentralized architecture.
Security

16. The Smart Contract’s Power
A smart contract in more than one blockchain can provide you with
an advantage for digital supply-chain revolution. This is a special
code upon which program business logic is based.
It helps to supervise stakeholders, providing flexibility in the
process.
Let’s think about the investigation of the Deloitte white paper
“When Two Chains Combine — Supply Chain Meets Blockchain.”

18. How it works:
First, a trigger initiates all required factors to execute a
smart contract.
Then, a product is directed to the next chain section. This
increases the speed of the blockchain, as all operations are
immediate.
The Smart Contract’s Power

19. In the picture there is is a list of
common digital supply-chain use
cases, and the ways they can be
solved by blockchain.
As a result, smart contracts will
reduce working capital requirements
and simplify finance operations.
The Smart Contract’s Power

20. IoT in the Supply Chain
Smart contracts allow the establishment of self-executing code for
robots to provide supply-chain services via interaction with each
other, without the need for an additional intermediary IT system.
Robots will be able to recognize each other and initiate events that
activate other robots. This will be especially valued in the time
when self-driving trucks begin their rise.

21. There are even IoT-oriented distributed systems that have already
been created for this purpose, like IOTA. This is based not on the
blockchain, but on DAG, which makes it perfect for MESH-network
connection, in which you have no need for an internet connection
between robots. With layers of blockchain that support smart
contracts (like Ethereum, Cardano, NEO, etc.), IOTA could become a
powerful tool for automatization of the supply chain.
IoT in the Supply Chain

22. Convenient Payment System
Blockchain allows the transfer of funds to take place anywhere in
the world. There is no need for traditional banking methods. The
transfer is a direct path between payer and payee. It is also secure
and fast compared to automated clearing house payments. Bitcoin
offers low-fee transfers.
You may be asking, “How can I apply blockchain technology and get
all these benefits?”
Here is the answer. We are not greedy today!

23. Three-Step Approach
Due to the three-step approach, blockchain can be
integrated into supply chains very successfully.
In order to implement this integration, you have to:

24. 1. Establish a company internally based upon
blockchain technology. Obviously, it will take time to
develop the technology and keep the data available
and coordinated.
2. Involve the participants (for example, logistics and
direct suppliers to improve the data transfer
process) in a blockchain community.
3. Unite all participants around the supply chain.
Three-Step Approach

25. In this way, blockchain makes the customer experience more enjoyable, ensures
end-to-end value, eradicates any existing problems, and decreases costs.

26. To sum up, blockchain technology is a modern exchange solution method for
conducting digital supply chains. Its ledger, security, and smart-contract
platforms offer tools designed to develop a flexible, cost-effective DSC
network.
Blockchain technology appears to be a good fit for this kind of integration.
Better visibility in procurement, more accurate and reliable data for analytics,
and increased trust among all participants in your supply-chain network are
some of the benefits of adding blockchain to your infrastructure.
This technology will become a focal point of change in the coming years.
Blockchain benefits from the network effect. As soon as key players start
employing blockchain technology — others will follow.

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28. This topic was covered by Applicature.
You can read the whole article here
https://medium.com/applicature/blockchain-as-the-backbone-of-digital-supply-chains-3ad1d0a4569c