The implementation of blockchain technology in supply chains could save businesses in Western Europe $450 billion in logistics-related costs.
According to a new study from Cointelegraph Consulting and Swiss enterprise blockchain firm Insolar, blockchain technology can reduce supply chain-related costs for businesses between 0.4% and 0.8%.
While that may sound like a small figure, the sheer volume of the sector means that this percentage translates into a potential hundreds of billions in savings. Furthermore, the report claims that the technology will pay for itself:
“94% of supply chain leaders say digital transformation will fundamentally alter supply chain management. In the transition to industry 4.0, industrial business can expect a 25% gross increase in [Return on Capital Employed] by 2035.”
In the joint study, Cointelegraph Consulting and Insolar survey the problems that enterprise firms experience in managing their supply chains, stating that 60% of companies overpay their supply chain vendors. And 70% of firms have “visibility gaps” between the initial supplier and internal clients’ systems, making tracking of supply chain sources difficult or impossible.
Current tech cannot solve supply chain issues
Current technological solutions like enterprise resource planning and traditional databases are ill-equipped to address contemporary supply chain issues, according to the study. One reason: Nearly 80% of enterprise data is siloed and prone to reduced integrity. The study states:
“The database approach fails to provide an inherent share of data related to the supply chain, which is crucial for counterparties that do not trust each other to obtain information about a certain product, its price, delivery conditions, etc. The information is not always up to date from some parties, and some data may be hidden.”
Insolar’s founder, Peter Fedchenkov, notes that blockchain adoption will not necessarily uproot current IT systems, stating that it can be applied in tandem with existing infrastructure. He told Cointelegraph:
“When people think about blockchain there is a misconception that it’s a new paradigm requiring a change in business entirely. We believe this is wrong though, and offer an approach to complement organizations existing IT infrastructures using our blockchain platform.”
Cointelegraph Consulting launched on Dec. 3 and aims to aid blockchain adoption among small and medium-sized businesses by matching them with enterprise blockchain solutions that are applicable to their operations.
Blockchain a boon for supply chains
Blockchain technology has seen widespread adoption across supply chains of various goods including diamonds, rare metals, fashion items and food. According to major American retail firm Walmart, distributed ledger technologies like blockchain make it easier for the firm to recall problematic medicine or food items should the need arise.
Last week, Big Four audit firm KPMG launched a blockchain-based track and trace platform in Australia, China and Japan.
Recently, retail giant Carrefour and Swiss food and drink conglomerate Nestlé joined IBM’s Food Trust platform to track the supply chain of milk-based formula for infants with blockchain tech.
In August, Cointelegraph reported that the second-largest Indian state of Maharashtra was preparing a regulatory sandbox to test blockchain in various applications including supply chains, agricultural marketing, vehicle registration and document management.