How investment in blockchain and AI can strengthen the supply chain
Virtually no area of the global economy has been left untouched by the impact of the COVID-19 pandemic. From multinational conglomerates to family-run businesses, companies have faced major challenges in the past two years around staff shortages, rising prices and broken supply chains.
While there is no doubt that modern supply chains were far from perfect before the virus spread, the pandemic both exposed and exacerbated these weaknesses.
In the first weeks and months of the pandemic, medical supplies and equipment became much-needed items, with acute shortages worldwide. Complex supply chains where manufacturing and production were spread over several countries were disrupted or collapsed, as even a relatively small matter in one place had a major consequence.
“Many businesses that had managed with lean inventory positions experienced material shortages and were unable to meet customer orders and demand,” explains Ian McNally, vice president at leading global supply chain consultancy Efficio.
“This was particularly the case when companies had consolidated supply to single suppliers for some of their lines or order requirements and had few alternative sources of supply when things got tight.”
Bucking the trend
Today, products as diverse as everyday groceries, game consoles and vehicles fall victim to ever-present “supply chain problems”. Companies are increasingly turning to innovative blockchain and AI solutions to mitigate some of the most pressing supply chain issues and ensure their supply chains are as robust as possible in preparation for future disruptions.
These advances are not a future innovation, with many powerful examples already widely used by industry today. Developed jointly by technology firm IBM and logistics giant Maersk, the TradeLens platform uses blockchain and AI to empower manufacturers, freight forwarders and port operators in the global shipping ecosystem to achieve modern shipping processes and a seamless workflow.
“Many companies that had managed with lean inventory positions experienced material shortages and were unable to fulfill customer orders and demand.” – Ian McNally
The simple trust platform for all businesses includes a collaborative programming interface concept that includes a huge range of activities including warehousing, shipping and trucking that can be viewed in a single interface.
Organizations such as the Royal Malaysian Customs Department and Standard Chartered Bank are part of this trusted ecosystem.
Market shock
Automating supply chains, unlocking data-driven insights that can optimize transportation and reduce red tape are all possible by embracing AI and blockchain tools.
For example, human errors and mistakes are estimated to be found in around 15 percent of invoices and orders, leading to delays and additional costs. When a comprehensive AI system is implemented, this type of error can be made a thing of the past.
Unlike conventional supply chains, where poor visibility, siled systems, extended payment cycles and complex contract management are the norm; blockchain and AI go beyond just being buzzwords and can present an opportunity for digital transformation.
“Blockchains first and foremost enable an immutable, append-only ledger that forms the foundation for creating secure, transparent and trustworthy ecosystems.” – Gopikrishnan Konnanath
In practice, the shared network infrastructure of a blockchain-based supply chain system can not only improve communication and collaboration between firms in all parts of the supply chain, it can also improve transparency.
The distributed ledger technology of blockchain supply chain solutions offers a single, shared view of all activities, allowing disputes to be significantly reduced.
“Blockchains primarily enable an immutable, append-only ledger, which forms the basis for creating secure, transparent and trusted ecosystems. Now different participants in the value chain have a superior system to trust the data and therefore their partners,” said Gopikrishnan Konnanath, Senior Vice -President and Global Head of Engineering and Blockchain Services at the information services company Infosys.
Smart contracts on the blockchain can be designed so that they are executed automatically when certain conditions are met. For example, the moment a shipment is marked as received, payment for the items can be made immediately, reducing waiting times while ensuring that payments are only sent when the products are received.
An advanced approach
A majority of supply chain leaders are working to realize the benefits offered by AI, with an IBM survey of Chief Supply Chain Officers finding that 72 percent expect their processes and workflows to be automated within the next three to five years.
Advanced AI products fit perfectly into the blockchain-enabled supply chain ecosystem. Smart sensors can be integrated across critical locations in the supply chain, and the resulting data can be fed into distributed ledgers and then analyzed by AI tools to achieve real-time end-to-end tracking.
“AI enables operational efficiency rooted in accurate data, and with blockchains this can be done without compromising privacy.” – Gopikrishnan Konnanath
“Intelligent algorithms working with reliable data can predict demand variations, systemic risks of concentrations in factories, suppliers and countries or locations. AI enables operational efficiency rooted in accurate data, and with blockchains this can be done without compromising privacy,” says Konnanath .
There is no shortage of lessons to be learned from the unprecedented global supply chain disruptions of the past two years. Organizations that embrace the potential of blockchain and AI-enabled supply chain solutions can expect to stay one step ahead of potential supply shocks and ensure customers are able to get the products they want, when they want them.
