5 Challenges To Prepare For When Using Blockchain For Supply Chain Operations

1. Determining The Extent To Which You’ll Use Blockchain Technology

I’ll focus on the five most important challenges you should prepare for when you’re building a blockchain-powered supply chain management solution.

One of the first things to decide is whether your solution should be fully dependent on the blockchain or whether you’ll use it only for powering specific features. Blockchains typically shine the most when they’re fully integrated into your system. The more off-chain components you have, the more compatibility concerns you might need to address.

2. Ensuring Data Quality

However, moving an entire supply chain platform to a blockchain requires a lot of resources. Therefore, you can start with a single blockchain-powered feature — say, for delivery tracking. This could improve the transparency of logistics processes without causing system overload. After you evaluate the real-world efficiency of this feature, you can continue integrating blockchain features into your supply chain one at a time.

3. Granting Data Access To The Right People

One way to address the previous challenge is by granting data access rights granularly. To avoid data leaks and financial losses, it’s important to share your critical data with the right people and under the right circumstances.

4. Choosing The Right Development Approach

Determine different levels of data confidentiality so that any unauthorized users, including your third parties, won’t get ahold of information they aren’t supposed to. You can also determine a set of roles with associated access rights and assign roles to everyone who will be working with your supply chain management system.

There are three common approaches to building a blockchain-based solution for supply chain management:

* Use an existing global platform. Large, popular blockchain platforms are typically reliable because many users have already tested them. However, a ready-to-use platform may provide limited opportunities for adjustment and require significant changes to your existing system.

* Use a public blockchain with smart contracts. It’s fairly easy to create a solution based on smart contracts and adjust it to your needs. However, popular public blockchains with support for smart contracts can be too slow or too expensive for supply chain tasks.

* Build a custom network. A custom blockchain network can perfectly fit your company’s existing system, perform smoothly and have reasonable costs for transaction processing. But building such a solution requires extensive expertise, thorough planning and some extra effort.

5. Ensuring Smooth Integration Of A Blockchain-Powered Solution

In my company, we have experience working with different blockchain development approaches but prefer to build custom blockchain networks based on public blockchains. In this way, you can make sure the final solution possesses all the benefits of the chosen platform while gaining the necessary functionality with minimal or zero required system adjustments.

Supply chains connect multiple parties, including manufacturers, suppliers, retailers and end customers. Therefore, they rely on different tools: ERP systems, management applications, tracking solutions and so on. Integrating a blockchain platform with all these tools can be a real challenge.

First, not every third-party system and application supports blockchain technology. You’ll need to wisely plan the architecture of your solution, including all the APIs, containers and microservices you use. Also, pay special attention to the security of data, both in transit and at rest.

Second, it’s likely that not all your vendors, subcontractors and customers will agree to join your platform if it incorporates blockchain technology. They may have different concerns regarding the use of a shared environment, from system integration overhead to data security issues.

As you can see, while they have a lot of benefits, blockchain-based supply chains aren’t that easy to implement. Taking the abovementioned challenges into account and planning your actions thoroughly will help you experience all the benefits of blockchain-powered supply chain management.

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