Managing and regulating the complex networks of companies, suppliers, and wholesalers involved in producing and distributing products in the modern economy is a daunting task. Depending on the goods being supplied, supply chains can apply countless steps. These periods can span months or years and involve several distributors, multiple locations, and multiple invoices and payments. Supply chain management has always been a multifaceted system with many moving parts.
When checking a product’s progress at its various stages of production, Web2-based supply chain management needs to catch up. The price paid by stakeholders such as regulators and advocates on the management committee was high. The global shipping, supply chain, and logistics industries have been hampered by restrictive and insecure innovations made by Web2.
The advancements made possible by web3 in logistics and supply chain management are greatly appreciated. It provides an alternative paradigm for utilizing blockchain protocols while still providing a decentralized infrastructure for sharing data at a very high level of security. Check out this article to learn more about how web3 has revolutionized logistics and supply chain management.
Facts And Stats Related To Logistic Industry
- Fifty-three percent of those polled believe blockchain will significantly impact their respective industries.
- 40% of supply chain executives plan to invest in blockchain and IoT sensors.
- From 2022 to 2030, the U.S. retail logistics market is projected to grow from its 2021 valuation of USD 43.17 billion at a CAGR (compound annual growth rate) of 11.0%.
What Are the Features of a Web3 Supply Chain?
The Web3 supply chain and logistics system have the following unique characteristics that make it extremely secure:
The distributed ledger used in web3 supply chains and logistics allows all participants in the supply chain to see and track the full transaction history, from orders and production to payments and delivery, in real-time.
Automated Record Keeping
Information from connected systems (ERPs, IoT data management base, etc.) and all participants’ supply chain and logistics transactions are automatically verified. This information is then safely kept in the decentralized web3 ledgers.
Verified Supplier Data
Blockchain, Web3’s core technology, provides essential management and validation features for suppliers. It aids in validating supplier information by reliable third parties and provides an immutable audit trail for all suppliers on-chain.
Automation Using Smart Contract
Smart contracts can automatically govern supply chain and logistics transactions thanks to their built-in clauses and instructions. All parties along the web3 supply chain have already agreed to these terms. When all the conditions and clauses are met, for example, when all the goods and logistical metrics are monitored, when transportation compliance is checked at predetermined regular intervals, and when a payment is processed to the appropriate supplier upon timely product delivery, automation occurs.
Hashing and Time Stamping
In most cases, a hash value is generated on the blockchain to facilitate the Web3 supply chain and logistics. This ensures that each data alliance in the blockchain has its own distinct identifier value. If the data in one of the blocks about the store chain is updated or changed, the hash value of all the subsequent blocks will change. Through timestamping and hashing, the logistics and supply chain data in web3 is made unchangeable and secure.
Data encryption, multi-factor authentication, permission-less chain access & control, fraud detection algorithms, and other measures are some security features made possible by integrating Web3 with supply chain and logistics management.
Digital Transaction Signing
All parties involved in a web3 supply chain transaction are equipped with unique digital signatures that allow them to electronically sign contracts and verify their licenses in a single, streamlined process.
Audit Trail for Documents
All contracts, sales and purchase orders, bills of lading, product certificates, manufacturing configurations, quality assurance reports, and other crucial supply chain reports are tracked in the Web3 supply chain because it is fundamentally based on blockchain technology. The report’s creation, formatting, viewing, and sharing history are also recorded.
Registered Supply Chain & Logistics Segments
Blockchain users in the web3 supply chain can divide and conquer the onboarding of all supply chain effects, documents, and locations. In addition, the GS1 (Global Traceability Standards) codes used by supply chain participants facilitate a consolidated database and faultless product tracking, ensuring that all transactions in the supply chain and all logistics regulations are accurate and in order.
Authorized supply chain members with access to Web3 logistics transactions perform validation. By using on-chain selective endorsement, these transaction validators ensure that all transactions are recorded in the correct order.
How Is Web3 Beneficial for Supply Chain and Logistics??
Web3 marketplace development, powered by blockchain technology, has three main benefits for logistics and supply chain management.
Using security monitoring and mapping the company’s supply chain and logistics, Web3 improves traceability and high operational efficiency of supply chain and logistics management. Customers expect to know where their products are made due to the widespread availability of high-quality digital imaging and documentation. As a result, businesses can better understand their supply chain and logistics metrics and engage with customers by providing accurate, immutable data on the goods and services they offer.
Web3 creates unique and separate hash values for all transactions and data, such as claims and certifications, which increases confidence and security in the supply chain and logistics management process. The public is then granted unrestricted, open access to the logistics and supply chain management procedure. Network validators ensure the legitimacy of business supply chains recorded on blockchains like Solana or Ethereum. Information on the web3 supply chain can be seamlessly updated and validated in real-time, making it ideal for ensuring transparency.
For the logistics and supply chain sector, web3’s tradability is a key feature. The clarity of the writing reimagines the traditional idea of the market. Thanks to web3 and blockchain technology, supply chain participants can now token transactions quickly and easily.
Tokenization allows this by creating a system in which a different participant owns each token, but all tokens are held in equal, verifiable digital ownership. It’s very close to the idea of buying stock in increments of a small percentage. The tokens can then be traded quickly and easily, and token holders can even digitally transfer token ownership in real-time.
How Does Web3 Streamline Product Recall in the Supply Chain?
Global supply networks underpin everything from consumer packaged goods to product recalls. Sometimes, it becomes necessary to identify consumer goods or raw materials to prevent injuries or illnesses. Lost sales, replacement costs, and legal fees are just some ways in which product recalls hurt millions of people worldwide. Web3 can enhance product traceability by reducing counterfeiting and speeding up the recall process.
Recalls are more efficient and cost-effective when manufacturers can easily and quickly identify products that have been compromised. By making the supply chain more transparent and traceable, Web3 facilitates more efficient and expedited recalls.
Web3’s supply chain goals include boosting logistics transparency, enhancing the traceability of transactions involving multiple parties, eliminating the need for manual start-up and recording of commerce, and strengthening the security of sensitive supply chain data.
Several factors, including the growing need for supply chain accountability and traceability, the reliability of supply chain and logistics transactions, and the complete automation of supply chain finance procedures without intermediaries, drive the adoption of web3-based solutions.