When most people hear the term blockchain, the first thing that comes to mind is the cryptocurrency. Although the blockchain was originally developed to track Bitcoin transactions, its development has gone far beyond its financial origins. Now, organizations in every industry are exploring the blockchain's ability to create immutable shared records of all business data and transactions.
Blockchain has become a hot topic, especially between brand consumers and retailers. The technology is expected to affect all aspects of the retail sector in the coming years, from payment methods and customer engagement to marketing, and perhaps the most promising application - supply chain management.
Getting started with the
blockchain in the retail supply chain Today's retail supply chain is more complex than ever. They include countless suppliers, production sites, warehouses, shippers, brick-and-mortar stores, and online sales channels—each with their own disconnected supply chain management software, enterprise resource planning (ERP) systems, spreadsheets, and even Hard copy documents. This disconnection makes it difficult for parties in the supply network to share critical information, ultimately resulting in severe inefficiencies and imbalances between supply and demand.
The blockchain provides a way for brands and retailers to digitally and securely store data for all transactions and product movements—from source to shelf and back to the shelf. Information is visible in real time, so all parties can accurately see the products being produced, shipped and sold at any given time. In addition, the information recorded on the distributed ledger is tamper-proof, as no changes are possible without the consent of the entire network. This level of transparency, traceability, and collaboration makes the blockchain an ideal solution for many of the tough challenges that plague retail supply chains. Most notably, it benefits brands and retailers: • Actively manage demand forecasting, production planning and inventory replenishment • Smartly allocate inventory to the right sales channels, optimize retail space planning • Identify product sources and reduce the impact of product recalls • Supporting ethical and sustainable procurement • Barriers to blockchain use in counterfeiting and gray market trading Despite the potential for change in the blockchain, it is still in its infancy in the retail sector. While large companies such as Walmart, Target and Starbucks have taken the lead in adopting this technology, the proportion of brands and retailers that actually invest in the technology is relatively low. In addition, many of these projects are still in the proof of concept phase, not the full enterprise implementation phase.
There are several major obstacles to the widespread adoption of blockchains: time, cost, uncertainty, and complexity. Most systems currently available on the market involve lengthy development phases and deployment times, typically up to 12 months. They also need to invest a lot of upfront costs for the new infrastructure – many companies are cautious about this investment. In general, many people are only worried about implementing, integrating and learning a whole new kind of technology.
But even with these obstacles, the use of blockchains in the supply chain is expected to increase substantially. In fact, in 2019, Mitsubishi Heavy Industries' annual industry report predicts that its usage rate will increase to 62% in the next five years.
Using
blockchain as a service, starting with this simple growth will be Blockchain as a Service (BaaS), which will make it easier for brands and retailers to start using their own distributed ledgers than ever before. By using the popular software-as-a-service model, the Blockchain as a Service (BaaS)-enabled supply chain management platform eliminates the need for complex internal systems because all users need to connect to Internet browsers.
Companies that are not sure where to start should consider the following benefits of BaaS:
• Fast implementation: The BaaS platform simplifies implementation and reduces deployment time from months to weeks. Users only need a device that can access the Internet, not a new large infrastructure. Installation and ongoing maintenance are handled by the technology vendor rather than placing the burden on the internal IT team. In fact, experienced vendors can plan, develop, test and launch BaaS systems within 90 days.
Simple integration: The BaaS platform can be seamlessly layered into the business technology stack instead of eliminating established software. This actually includes any existing systems for supply chain management, accounting, inventory management, purchasing, e-commerce, product certification, etc.
Affordable payments: BaaS deployment can be afforded through low-cost, subscription-based payments. This makes the blockchain affordable for any IT budget, as users can pay in installments on a monthly basis instead of prepaying large sums. Any system updates are included in the subscription, so businesses don't have to worry about their systems becoming obsolete as blockchain technology evolves.
· Ease of use: Allowing internal teams to accept changes can be a challenge when implementing any new technology into operation. BaaS provides user-friendly access through familiar hardware (any computer, mobile device, tablet, etc.), which means the learning curve is very flat. Employees will soon feel comfortable and confident in this technology for a smoother transition.
· Future scalability: With BaaS, you can start small and scale as needed. The technology is flexible enough to be deployed at the level that meets current needs and then easily scales as your business grows. A single system can solve today's challenges and meet tomorrow's needs.
How to use BaaS to build a complete supply chain transparency
A good example of BaaS success comes from the food and beverage industry. Ruby Rockets is a frozen food brand dedicated to providing healthy, trustworthy products to consumers' families and children. To ensure that only organic fruits and vegetables are used in production, Ruby Rockets needs to track products from farm to retail shelves. However, this level of transparency is not possible in previous ERP systems. To view the history of a product, you need to piece together complex and time-consuming spreadsheets, analytical certificates, and written records of other different records.
Ruby Rockets achieved a blockchain leap through the BaaS supply chain management platform. In less than 90 days, the platform was integrated with Ruby Rockets' existing accounting systems, purchase orders, inventory management systems and online stores. The data for each transaction and all product movements is recorded and immediately available to decision makers for real-time visibility from the raw material supplier to the consumer.
Ruby Rockets can now quickly track product sources, easily manage food safety, and ultimately build greater consumer trust. Ruby Rockets is able to instantly understand what consumers are buying in stores and online, and can predict and plan production in both channels in advance. Just six months after its release, Ruby Rockets significantly increased productivity by 20% while reducing the OTC order cycle by 15%.
In the future, new technologies like blockchain will become a key part of the growing retail industry. Today's innovative companies will be ahead of the industry, ready to actively meet consumer demand and improve profitability. BaaS extends the benefits of blockchain to brands and retailers of all sizes so that small start-ups and global conglomerates can begin to build efficient, transparent and secure supply chains in the future.