“Blockchain” has become a global buzzword in recent years, thanks to the rise of various cryptocurrency platforms and coins, as well as the growing number of areas where they can be used. However, despite its popularity, many people still view blockchain as nothing more than a way to buy NFTs (non-fungible tokens)—which is a shame, as there are also numerous potential applications of blockchain for retailers. Read on to find out how using blockchain for supply chain management can improve day-to-day operations at your retailer.
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What is blockchain technology?
Blockchain is essentially a decentralized digital ledger of “events” or transactions. Explained in layman’s terms, the decentralized aspect refers to the fact that this information is stored on multiple computers across different networks or even geographical locations, so no one person or computer has full access to the data found on the ledger. The events recorded on the blockchain can refer to anything from production and tracking information for goods shipped from overseas to the provenance of who owned an NFT prior to its sale. Essentially, the blockchain system is there to provide a permanent record of data pertaining to whatever is being tracked.
Although blockchain technology started out in 2008 as a system for trading cryptocurrencies such as Bitcoin (and subsequent alternatives like Ethereum), savvy entrepreneurs the world over have found other excellent uses for this decentralized method of record-keeping—and the retail landscape is no exception. From logistics tracking to bankless payments, blockchain technology has plenty to offer for the retail industry.
Related: 10 Potential Benefits of Blockchain In Retail
How can blockchain improve retail supply chain management?
Permanence
Given the fact that the data found on a blockchain is stored across multiple computers, it is virtually impossible to erase any data points from a single computer, meaning the information stored on blockchain functions as a permanent record. This aspect of blockchain makes it a dream-come-true for retail supply chain managers who need to access data pertaining to past events, such as shipment dates, product pricing, or even cargo volumes from a delivery that occurred months or even years ago. The availability of accurate information on past transactions enables retail supply chain managers to handle any logistical disputes regarding prior shipments, view and analyze long-term trends, and make projections accordingly.
Transparency
Another key benefit of blockchain technology is its transparency, as all the information stored in the system is accessible to every party who is involved. This makes it incredibly difficult for any one player in a retail supply chain to go back and falsify data, as the other computers also have a record of what came before.
The transparency element of blockchain technology has benefits that are two-fold for the world of retail. First, it helps build trust among the different players across a supply chain, from the manufacturer to the warehouse and the distributor. Secondly, transparency also becomes more important for consumers, who are more invested in knowing where their goods came from and the conditions under which they were produced.
This is especially true in certain segments of the retail landscape such as organic food and drinks, where the country of origin can be a determining factor in itself for savvy customers looking to buy goods that have specific qualities or that have only traveled a certain distance before reaching the end buyer.
Security
A major concern for luxury retailers, counterfeit goods have been around for as long as anyone can remember, with great detriment to both the brands creating the original product and the customers getting duped. In fact, according to the Global Brand Counterfeiting Report 2018, the global counterfeit market was projected to reach US$1.82 trillion by 2020.
Formerly, it was much more difficult to identify counterfeit goods until it was too late—i.e. until the customer had already purchased the item and, for whatever reason, grew suspicious of its originality. Yet today, both luxury retailers and others with highly proprietary designs such as electronics manufacturers can use blockchain technology to implement advanced anti-counterfeiting measures to protect their patented designs or inventions from theft. Whether it’s luxury watches, designer handbags, the latest tech gadgets, or, yes, even NFTs, blockchain enables companies to certify their authentic goods with an immutable and tamper-proof ledger, making counterfeiting and fraud much more difficult than before.
Fast transactions with a single, fixed currency
Since blockchain technology was initially designed as a system for payments, it should come as no surprise that some retail companies using blockchain for supply chain management also choose to make and accept payments via cryptocurrencies like Bitcoin.
This has a multitude of benefits for retailers, the most important of which is that it standardizes the currency used in payments, thus eliminating the need to plan their payments around currency exchange rate fluctuations—which is especially important for retailers whose suppliers might be scattered around the globe.
Using cryptocurrency on the blockchain also frees retail store owners and their suppliers from having to deal with any of the transfer fees or delays associated with traditional banking, which eliminates unnecessary downtime that may otherwise be spent waiting for payments.
Real-time information
Last but certainly not least, blockchain technology provides instant, up-to-the-minute information about logistical transactions in the retail supply chain. Say you’re the representative for a retail brand whose products are generally shipped from overseas, and you’ve just been notified of an issue with a particular batch of products.
With the blockchain, you are able to quickly track the status and location of either all or part of your shipments, which gives you immense power in making quick decisions. If you have to recall the products, you can take the necessary steps to cancel shipment even they are in transit—thus saving you lots of time and money than if you had had to wait for the products to arrive in your country before taking action.
For real-life examples of companies that have already adopted blockchain technology in their day-to-day operations, check out our roundup of 10 Retail Companies Using Blockchain Technology.
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