Friday, August 10, 2018

How Blockchain and IoT is Revolutionising Supply Chain Management

A supply chain is a network between a company and its suppliers to produce and distribute any product and includes all the steps it takes to make the product or service reach to the respective customer. The global market size for supply chain management solutions is estimated to reach $32.4 billion by 2026 at CAGR 11% from 2018. This rapid expansion is attributed to the high demand caused by e-commerce companies to gain a competitive edge in the industry. However,  traditional supply chain management has several limitations such as lack of end to end visibility, poor response times, inefficient model due to multiple intermediaries and etc. Therefore, to maintain a competitive edge, enterprises have to look for advanced and innovative solutions to be incorporated into their supply chain processes. Solutions enabled by technologies such as the internet of things and blockchain is touted to have a promising potential to eliminate such inefficiencies in the supply chain. According to a joint report by DHL and Cisco, IoT is estimated to create $1.9 trillion market alone for supply chain and logistics. This is an enormous impact that proves the disruptive potential of blockchain and IoT.

Supply chain has become increasingly sophisticated, for instance, Amazon manages its supply chain through multiple ways such as maintaining its own warehouse, having partner distribution centers and third-party networks. Despite such sophistication, retail giants like Amazon still struggle with certain issues such as providing last mile connectivity due to reliance on courier companies, visibility of products and accountability as a result of outsourcing certain roles. While such inefficiencies may not be immediately detrimental to large corporates (as they have already established a market dominance), small or medium-sized enterprises cannot afford to have such issues to stay competitive in the market. Essentially, for large and small enterprises alike, the challenges in supply chain management arise due to globalization, changing consumer trends and regulations. Commenting at those issues, Selvam VMS, a supply chain expert and the CEO of an IoT based supply chain startup, says ‘Regardless of the geographical spread, catering to the consumer demand without delay is a critical measure of supply chain success, for this, transparency in the supply chain channels and traceability of inventories becomes a main ingredient for effective and efficient supply chain management’.

Therefore, transparency and traceability in the supply chain can be improved by adopting solutions that new technologies offer and to understand the impact they can do in supply chain, a close look at certain challenges in the supply chain is imperative.

Challenges faced by supply chain management

With evolution, many challenges are encountered which restricts the progress of supply chain management in the market.


Globalization is one of the significant factors that will impact the progress of supply chain. There are several issues which globalization presents as a critical challenge say,

  • Firstly, enterprises globally have started manufacturing operations to those countries where the taxes, labor cost and cost of transporting raw materials are lower. Outsourcing practices have extended company’s procurement network. Since the suppliers are spread over various geographical locations, it has complicated the supply chain. Companies need to contact, coordinate, collaborate and deal with the suppliers across borders with respect to manufacturing, logistics and warehousing.  Also, they need to keep in account that the delivery of product/services to consumers must be as per the schedule. Additionally, to maintain and increase efficiency, the company must have a real-time visibility on the production cycle- conversion of raw materials to finished goods.
  • As enterprises expand their sales over countries, localization of existing goods calls for a change in the supply chain as per the culture and preferences. Also having global suppliers increase the complexities of tracking and controlling the chain.