By Shekhar Sanyal, Country Head & Director, IET India
The pandemic has wreaked havoc on the lives and livelihoods of millions across the globe. Businesses have borne the brunt of lockdowns. Slowdowns in the manufacturing sector and global supply chain disruptions have choked economic activity to a signiﬁcant extent. Rating agencies predict that India would fail to record a double-digit growth in the current ﬁscal year. In April, World Edition Outlook of the International Monetary Fund had raised India’s growth forecast to 12.5%. Given the pace of vaccination, lockdowns in various parts of the country and the impending fear of a third wave, the revision in growth projections seem reasonable and well placed.
Covid-19 has exposed the frailty of global supply chains. Fragmented supply chain systems have impacted the ability of organizations to respond in a collective manner. The collaboration required to prove the authenticity as well as provenance of medical supplies, food and essentials in a secure and efficient manner was amiss. The pandemic has established the case of an interconnected, resilient, and interoperable supply chain to ensure uninterrupted commerce sans borders.
It is important to sort out issues related to data ownership, governance and create a viable commercial model to incentivize all stakeholders in the supply chain ecosystem. Interoperable blockchains can foster collaboration amongst all participants in a supply chain network in an efficient and scalable fashion. Both open-source public and private blockchains can be used for Business to Business (B2B) and Consumer to Consumer (C2C) data exchanges.
For supply chains to be globally interoperable, data exchange has to be seamless across geographies and this is where blockchain as a decentralized distributed ledger technology can bring in the beneﬁts of veriﬁability, authenticity to trade ﬂows. The single source of truth can be used to expedite business processes and optimize capital spend.
Supply Chain Transparency:
Blockchain has the potential to offer signiﬁcant improvements across the supply chain by minimizing administrative costs and bringing in much needed transparency for material management. For effective management of supply chain processes, blockchain can be used to track, trace, and authenticate goods and services in a veriﬁable manner.
According to the Organisation for Economic Co-operation and Development, counterfeit goods account for over $450 billion in trade annually. A recent report by Center for Disease Control and Prevention suggests that more than 20 percent of medicines in emerging economies are reportedly fake, leading to fatalities and losses to the tune of billion dollars globally.
The immutability and provenance offered by blockchain can help in combating the menace of counterfeit drugs and reduce frauds. Blockchain technology, therefore, is necessary to reduce cost and risk in supply chain systems.
Limitations and Implementation Challenges:
*Integration with Legacy System - For any successful implementation, integration with legacy systems and networks is a prerequisite. Blockchain is no exception. Transition to this new technology requires devising a long-term strategy to chalk out migration requirements for blockchain adoption.
*Cultural Challenges - Blockchain brings a paradigm shift of decentralized trust which is in sharp contrast to well established norms of centralized networks and business processes. All stakeholders should be taken on-board to mitigate the adoption risk.
*Regulation: For an interconnected and interoperable global supply chain network, blockchain smart contracts should be recognized legally in courts and all jurisdictions. There is a need to bring in standardization with respect to laws so that adoption can scale. Regulatory roadblock, more often than not, proves to be the biggest hindrance with respect to implementation in highly regulated industries such as pharma and healthcare.
By the end of 2021, the global blockchain supply chain market is expected to touch $375.6 million. The market is driven largely by the demand to bring supply chain accountability and transparency. Business leaders and decision makers should seize upon this opportunity to spur growth and contribute to economic recovery.
At the Future Tech Congress, we will be discussing AI, Blockchain, Digital Twin and how these future technologies can help businesses gather customer insight and boost growth, in the areas of Manufacturing, Healthcare, Fintech and Supply Chain. Explore our full agenda here.
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