Blockchain is enabling suppliers to establish new relationships with buyers based on trust, transparency and efficiency.
COVID-19 and the subsequent lockdowns have disrupted global supply chains. The urgent need for trusted products has put supply chain challenges in the healthcare industry on the map. It has been a wake-up call for businesses that don’t have enough experience with well-established healthcare procurement systems – they are working to urgently retool their supply chains to help mass produce critical goods. However, an equally critical question remains – how can they establish new, effective relationships with buyers? The answer in one word is blockchain.
It’s the solution that helps establish trust between the buyers and sellers so they can decide if they want to do business, ultimately, providing better supply chain management for the future. It provides a high degree of data visibility and transaction accuracy that emergency buyers such as hospitals who are in urgent need of equipment and suppliers currently require from one another.
Supply chains have been a popular target use case for blockchain (see the previous blog on blockchain for ethical sourcing supply chains). In a nutshell, when information is written on the blockchain:
- Everything is recorded immutably – data cannot be changed
- Cryptographic security protects your data
- Provenance & trust are guaranteed in the data that’s distributed
- Everyone is accessing a single source of truth
This means that buyers and suppliers can have complete confidence in the real-time information they’re accessing.
Connecting Trusted Buyers and Suppliers
When connected over a blockchain network using a regulatory framework, protocols such as supplier vetting and paymaster services can be implemented so that known buyers and suppliers are meeting rigid qualification criteria. As a result, credentials and integrity become prerequisites of being part of the network.
So when new players enter the network – for instance, when fashion industry apparel makers entered the healthcare markets and the procurement ecosystem in order to serve the growing demand of PPE suits and other protective gear – buyers don’t have to worry about:
- Making bets on untested suppliers
- Supplier inexperience with producing (or procuring) goods
- Cancelling contracts for those failing to deliver
The Rapid Supplier Connect (RSC) by IBM is one solution that is making this possible for buyers and suppliers to quickly find each other with speed and confidence. It combines a scalable blockchain for business network, proven supply chain solutions, and a network of dedicated industry and technical experts.
Shift towards digitization
Most people don’t think about supply chains in their day-to-day, but it’s fair to say they are foundational to our everyday existence. It is imperative that the world must shift toward the digitization of supply chains (end-to-end) and tackle the trust barriers facing buyer and supplier organizations – whether across segments and products such as PPE, food distribution, or sustainable sourcing.
Ultimately, blockchain takes this friction out of the supply and distribution process and connects everyone involved through trust and transparency. This means that if you’re a new or established buyer or supplier, you can have full confidence in doing business with one another with the ability to leverage shared assets across a single, verifiable source of truth.
For future supply chain management, expect to see an even more evolving set of capabilities that blockchain can bring to the table and provide proactive solutions rather than reactive ones.