Blockchain has tremendous potential for transforming supply chains and disrupting the way we produce, market, purchase and consume goods. Managing supply chains involves managing flows between the source of the raw materials all the way to the end customer.
Most stakeholders within a given supply chain conventionally focus on efficiency optimization, but further digitalization has the potential to reduce costs and increase revenue. One of the most effective use cases of blockchain in supply chain is that unlike dated systems, a combination of human and computing assets keep track of goods as they flow through the supply chain from producer to customer. The simple idea behind Hercules is to facilitate a cohesive and non- fragmented chain of possession that can be accessed at any point along the supply chain route to ensure exactly who has what, where, when, and why.
This process can be nearly impossible to achieve using current supply chain management models which have often proven that each link in the chain is a potential point of failure, such as overlooked or mistyped entries, a shipping label error, or even a fraudulent scan which would result in inaccuracies within supply chain records if not detected, remedied and updated in the data system. With the Hercules Platform, not only will businesses be able to track goods in real-time, they will also have a higher level of security due to blockchain technology.
Some of the areas of supply chain management which can benefit from blockchain include:
- Recording quantity and type of goods or commodities being shipped
- Maintaining order tracking and logistics information
- Payment automation via smart contracts
- Process management to improve client service delivery
- Fraud prevention due to the immutable records on the blockchain
- Increased transparency and better authentication protocols
- Overall improved efficiency and better business relations which positively impact the business involvement.
Blockchain may be disruptive but not disadvantageous
At the rudimentary level, the core logic of blockchains means that a single piece of inventory cannot exist in the same place twice and that every movement of a product or asset is visible to all supply chain participants in near real-time with full traceability back to the point of origin. Using blockchain also means that businesses can negotiate procurement deals based on total ecosystem volumes, not just what they purchase from an individual supplier. Ultimately, blockchain-based solutions enable:
- Calculations of exact volume discounts based on total purchasing
- Proof of transaction data accuracy
- Preservation of privacy of each company’s individual volumes and protection of their competitive advantage
- Better visibility into procurement
- Increased trust among all participants in supply chain networks
- Accurate and reliable data for analytics
- Better procurement which means more visibility and more savings
- Improved data and analytics and consequently better outcomes
Innovation by integration
Identifying areas where blockchain could enhance supply chain processes, but also where distributed databases would be better than a blockchain database, will be key to achieving maximum efficiency. To give maximum viability to any blockchain- based supply chain management company’s value proposition, understanding that the processing power of decentralized blockchain databases may not be as efficient as a centralized system due to performance speeds is important, because only then can an innovative and new approach be introduced. One in which blockchain features are implemented into existing shared databases rather than making entirely blockchain-based solutions, which is a challenge Hercules solves by integrating already-established leading decentralized data storage systems such as Factom and Storj and utilizing the InterPlanetary File System (IPFS) which is essentially a protocol and network designed to create a content-addressable, peer- to-peer method of storing and sharing hypermedia in a distributed file system.
Why the Hercules Platform is the smart solution
Hercules is supply chain management software built on the blockchain that offers three main benefits: Asset or product tracking, asset measure component, and asset verification.
Asset or product tracking is the application located at the inter-section of information flow and material flow with a focus on providing status information about shipments or other logistics items. The asset tracking function is executed through a smart contract that creates a structure for the items to be tracked in the supply chain and manages the identification of each unique instance of an item in the supply chain.
The asset measure component is a smart contract that manages the interface between the Ethereum network and the various third-party storage solutions utilized by the Hercules platform. The asset measure contract weighs the data cost for uploading and retrieving information in the value chain, as well as handles the movement of the HERC tokens that are needed to execute the contract by the supply chain manager to register a new value chain.
The third critical element to Hercules is asset verification, which is achieved by means of a smart contract that makes it possible to verify items in the supply chain by comparing the data recorded about an item at different stages in the supply chain process to ensure that the data is consistent. Authorized users can initiate the verification process for an item at any point during the item’s passage through the supply chain.
Looking ahead…
With blockchain technology, businesses have the opportunity to recalibrate their approach to supply chain management at the ecosystem level to go from a narrowed perspective to an integrated global outlook. With that view, blockchain-based supply chain management software such as Hercules isn’t simply an innovative piece of software but is in fact a solution to fragmented supply chain infrastructure systems still commonly used today.
For more information about the Hercules supply chain management solution, please visit the Hercules website and download the White Paper here.