Valued at over $15 trillion, the global supply chain market is a massive beast, and it is evolving rapidly to meet growing demands for sustainability. Yep. That’s right! Notable brands such as Walmart, IBM, and Unilever are some leading projects implementing blockchain technology to create an ethical, transparent, and environmentally friendly supply chain. A decentralized ledger technology, such as Blockchain, initiates the promise of transforming sustainable supply chain management by allowing companies to track their products' ethical sourcing and environmental impact in several ways.
A sustainable supply chain integrates social and environmentally responsible practices into the entire lifecycle of goods and services, from raw material sourcing to production, distribution, and disposal. The main aim is to minimize environmental footprints, ensure ethical treatment of workers, and promote economic viability.
Blockchain technology provides an ethical and transparent transaction ledger that ensures supply chain sustainability. Here is how blockchain helps to sustain supply chain management:
Transparency and Traceability
One of the most significant advantages of blockchain in supply chains is its ability to provide transparency and traceability. Every transaction or movement status of goods is recorded on the blockchain, creating an authentic record that can be audited in real time. This accountability allows stakeholders to verify the origin of products and ensure that these goods are sourced authentically and ethically.
A good example is Walmart, which implements blockchain technology to track and record the origin of its products. Incorporating IBM’s Food Trust blockchain, Walmart can trace the journey of fruits and vegetables from the farm to the store locations in seconds. This ensures that the products are sourced sustainably and thus reduces the risks of foodborne diseases.
Ethical Sourcing
Blockchain assures that raw materials are sourced ethically by providing a verifiable record of each stage in the supply chain. This is especially crucial in industries with unethical practices, such as mining and agriculture.
Everledger uses blockchain to track diamonds' provenance, guaranteeing they are conflict-free. By scanning diamonds' unique physical attributes and recording this data on the blockchain, Everledger provides an error-free record of their journey from the mine to the consumer, sustaining ethical sourcing.
Reducing Environmental Impact
Supply chain management and sustainable logistics aim to minimize environmental impacts, and blockchain plays a significant role in this effort. By offering precise data on each supply chain step, blockchain allows companies to recognize and fix inefficiencies and areas where environmental impact can be minimized.
A prime example to notice here is the fashion industry, which is highly known for its notorious environmental footprint. The fashion industry is adopting blockchain to promote sustainability. Stella McCartney, for instance, partnered with Google to incorporate blockchain to track the environmental impact of its supply chain, from carbon emissions to water usage, allowing the brand to make data-driven decisions to reduce its footprint.
Sustainable logistics mainly aims to optimize the transport and distribution of goods to reduce environmental impact. Blockchain can increase sustainable logistics by improving efficiency and reducing waste.
Blockchain can be integrated with Internet of Things devices to track shipments in real-time. This allows companies to ensure effective, fast delivery routes and reduce fuel consumption.
DHL explored blockchain and IoT to increase its logistics operations. By tracking the precise location and condition of shipments, DHL can optimize routes, minimize idle times, and reduce emissions, ensuring more sustainable logistics.
Blockchain also significantly reduces waste and promotes recycling by offering a clear record of product life cycle stages.
For example, Plastic Bank incorporates blockchain to encourage recycling in developing countries. Individuals collect waste and bring it to Plastic Bank recycling centers. They are rewarded with digital tokens recorded on the blockchain. This system promotes recycling and reduces plastic waste in landfills and oceans.
Supply chain consulting firms are essential to help businesses integrate blockchain technology into their operations. These firms offer expertise in both blockchain and sustainability. Sustainable supply chain consulting firms aim to guide companies through the complex process of implementing such technologies to attain their sustainability goals.
Ernst and Young (EY) offers sustainable supply chain consulting services implementing blockchain technology. EY’s blockchain solutions allow businesses to improve and enhance traceability, transparency, and accountability in their supply chains, driving sustainable practices in different industry sectors.
IBM Food Trust is a blockchain platform that promotes traceability in the food supply chain. Big companies such as Walmart and Nestle implement IBM Food Trust to record food products' journeys and track them from the farm to the table, ensuring that they are sourced sustainably and responsibly.
Provenance promotes transparency in supply chains. Brands such as Unilever and Co-op use this platform to verify the sourcing of their products. Provenance’s blockchain technology allows consumers to trace their products from their origin and validate ethical sourcing and sustainability claims.
IBM and Maesrk developed TradeLens, a blockchain-based platform that enhances efficiency and transparency in global trade. By providing a transparent record of shipments and digitizing the supply chain process, TradeLens minimizes paperwork. This platform speeds up transactions, ensures efficiency, and promotes sustainability in global logistics.
While blockchain is crucial for sustainable supply chains, it also has concerns and challenges. The technology is evolving rapidly, and problems such as interoperability, energy consumption, and scalability need to be considered.
For blockchain to be effective in the global supply chain, various blockchain networks must be able to communicate and share valuable data effortlessly. To facilitate this, interoperability standards and protocols are being developed.
Blockchain networks that use a proof-of-work consensus framework can be energy-intensive. Experts are considering developing more energy-efficient blockchain technologies, such as proof-of-stake and various consensus algorithms.
Blockchain networks are responsible for handling large amounts of transactions efficiently. Solutions like Ethereum 2.0 and other blockchain platforms are being developed to cater to these challenges.
Blockchain technology has the potential to revolutionize sustainable supply chain management by offering transparency, traceability, and accountability. Implementing blockchain into supply chain management is not only a technological upgrade but also a huge step towards an ethical, more secure future. Firms such as Walmart, DHL, and Unilever are implementing blockchain to craft a more sustainable supply chain.
Blockchain-based platforms like Vanarchain allow innovative solutions that promote the development and implementation of blockchain in sustainable supply chains. Vanarchain’s expertise in blockchain technology offers the infrastructure an improved approach to efficiency and traceability, changing sustainable practices across industries. As more companies become accustomed to adopting this technology, we can expect to see a visible impact on the environment and society.
As more companies adopt this technology, we can expect to see a significant positive impact on the environment and society, laying the foundation for a transparent global economy.