By Yash Jain
For businesses, spreading their footprints across the globe has become the norm, and as a result, the supply chains are becoming more complex. If we look at the retail sector, lead times, speed, and accuracy are the topics of concern. To successfully manage the supply chain, companies must integrate sourcing, procurement, and logistics cohesively. However, the supply chain we have been witnessing is facing challenges as it is expensive, inflexible, and not as efficient as anticipated. This is because businesses and economies may have transformed over the years, but the technology that has been used may have remained the same. However, the emergence of blockchain technology is helping the retail industry address issues and improve the supply chain for smooth operations. In the context of the retail industry, blockchain technology can significantly reduce operational costs and incidences of fraudulence with intensifying transparency throughout inventory management.
Blockchain in Retail and Supply Chain Management
Blockchain technology aims to facilitate the recording and distribution of digital information that remains immutable. This is the reason why this cutting-edge technology has been leveraged by several sectors, and retail is not an exception. The rapidly increasing pace of retail, coupled with the rapidly transforming business landscape and changing consumer preferences, positions blockchain as a desirable solution for improving its accuracy, speed, and efficiency.
The decentralised and transparent nature of blockchain ensures the secure and tamper-resistant recording of transactions across the entire supply chain. Each transaction, from manufacturing to distribution and retail, is securely stored in a distributed ledger, providing a single source of truth for all stakeholders involved. This transparency enhances traceability, allowing retailers to track the origin and journey of products in real time, mitigating the risk of fraud, counterfeiting, and errors.
Leveraging blockchain technology in retail allows for recording the movements of a product across the supply chain. Moreover, all parties involved can access ledgers stored on a network, making system management more streamlined and efficient overall. In addition, there are several lingering problems in the sector, ranging from problems with data management to security and counterfeit concerns to a significant drop in operating expenses, which are addressed by blockchain technology. Now, apart from providing significant solutions to the challenges, this technology also has some seamless benefits for the retail sector, which is transforming it efficiently.
Transforming the retail sector
Being a decentralised database, blockchain technology allows the data to be transferred directly from one server to another. Information that is encrypted and accessible to all network users is contained in each block. There is a timestamp on every transaction. Generally speaking, direct data transmission using blockchain technology is quicker and more secure than through conventional means. This has allowed for efficient security, automation of processes, and optimisation of the supply chain. As a result, Blockchain has changed the face of retail in terms of enhancing transparency, preventing fraud in counterfeiting goods, and increasing speed and efficiency.
Enhancing transparency
Without blockchain, each enterprise has to maintain a separate database, and keeping track of all the elements can become daunting for them. The distributed ledger here can change the way organisations view information. Transactions and data are kept consistently in numerous locations due to the distributed ledger technology used by the blockchain. In addition, complete transparency is ensured by the fact that all network users with authorised access view the same information simultaneously. Every transaction is time- and date-stamped and permanently recorded. Therefore, it essentially removes the potential for fraud and lets all the members view the entire transaction history.
In the supply chain, the transparency enabled by blockchain empowers stakeholders to trace the journey of products from the manufacturer to the end consumer. Retailers can verify the authenticity of products, ensuring that they are not dealing with counterfeit goods.
Preventing counterfeiting
Products that are pirated or counterfeit continue to expand at a startling rate, causing massive losses for the affected businesses. An analysis released jointly by Crisil and the Authentication Solution Providers Association (ASPA) revealed that between 25 and 30 per cent of all products marketed in India are fake, with the apparel and FMCG industries being the most affected by counterfeiting. In this context, blockchain technology offers immense value to retail via its immutable and transparent nature. This technology can provide “proof of origin,” and the item’s lifecycle can also be traced along the entire supply chain. From the procurement of raw materials to their extraction and transportation, the enhanced transparency of blockchain technology shields retailers and customers from counterfeit goods.
Blockchain’s consensus mechanisms and cryptographic techniques make it highly secure, reducing the risk of fraud and errors in the supply chain. Smart contracts, self-executing contracts with the terms of the agreement directly written into code, can automate and enforce agreements, minimising the chances of disputes.
Increased efficiency and speed
The traditional processes in the supply chain were paper-heavy, making them prone to human errors. Moreover, often, businesses require the intervention of a third party, which increases costs. Blockchain technology can be used to expedite these processes, resulting in faster and more effective transactions. Moreover, paper exchanges can be avoided by storing documents and transaction details on the blockchain. In addition, clearing and settlement can happen considerably more quickly because there is no need to reconcile several accounts. With “smart contracts,” transactions can also be automated, accelerating the process and improving supply chain efficiency. To make sure that the conditions of the contract have been fulfilled, smart contracts minimise the need for human intervention and depend less on outside parties.
Real-time visibility into the supply chain enables retailers to better manage their inventory. Blockchain helps in tracking the movement of goods, optimizing stock levels, and reducing instances of overstock or stockouts by enhancing real-time visibility.
All things considered
The retail industry is dynamic and multifaceted. Successful retail occurs when several variables come together. Retail success depends on several factors, including locations, foot traffic, pricing strategy, marketing, branding, supply chain, inventory management, customer experience, and trust, all of which must converge at the right moment and in the appropriate proportion. Additionally, consumers today demand sustainability, which puts pressure on merchants to act responsibly, consider the environment, and disclose their carbon footprints to customers openly and honestly.
Among all, supply chains are the backbone of the retail industry and the integration of blockchain technology within supply chain management provides transparency, security, efficiency, and collaboration. It addresses challenges related to fraud, errors, and lack of visibility, ultimately leading to a more resilient and customer-focused supply chain. It fosters trust and cooperation by involving all the prime stakeholders, providing retailers with a robust foundation for building resilient and responsive supply chain management.
Herein lies the critical role of blockchain technology. It improves the supply chain’s accuracy, security, and efficiency while also boosting transparency, thwarting counterfeiting, and quickening the entire process. As the technology matures, retailers will find that all of these benefits are very potent resources to explore and apply in the coming years.
The author is founder and CEO, NimbusPost
