In line with the globalization trend, the network of supply chains of businesses is increasingly traversing across the four corners of the world. In the ultra-competitive modern commercial world where time is at a premium and cost reduction is the name of the game, supply chain inefficiencies are a definite no-no.
Under the operational frameworks of conventional supply chain networks, the participants across the different parts of the chain generally operate in silos. Not only is such a mode of operation lacking in transparency and uniformity, it also results in difficulties when it comes to the deploying of tracking mechanisms as well as creating an artificial need for extensive trail of paperwork consisting of documents such as payment invoices, bill of ladings and delivery receipts.
In the context of information transmission, the mode of operations of conventional supply chain networks render the process to be somewhat akin to a game whereby the participants are very much hoping against hope that critical information such as commodity prices, stock levels and shipment status are accurately transmitted throughout the network to its participants.
From a financial perspective, the inefficiencies plaguing conventional supply chain networks consistently burn a hole in the pockets of its proprietors. According to a 2018 study carried out by digital freight forwarder Zencargo, the supply chain industry loses 100 million hours every year due to inefficiencies in the procurement, supplier management and freight administration functions resulting in a total annual cost of US$1.98 billion.
Building on from its findings, Zencargo recommended that supply chain operators turn to digitization as a remedy for their inefficiency woes. However, digitization is but a part of the solution because as DB Schenker’s CEO Jochen Tewes puts it “no matter how digital you are, cargo has to move physically from point A to point B”. Perhaps the all-encompassing comprehensive solution lies in the development of a blockchain-based cognitive supply chain.
In times of crisis, fault lines are manifested in a crystal-clear manner for all to see. This notion held true during the Covid-19 pandemic when as a result of lockdowns imposed by governments in most countries global supply chains across a host of sectors were immobile for prolonged periods of time and subsequently ended up becoming stagnated.
This state of affairs highlighted the need for blockchain-based cognitive supply chains which function as intelligent self-learning distribution and inventory management systems equipped with predictive as well adaptive abilities.
As the world’s economy forges ahead on its towards globalization, international supply chains are likely to get more and more interconnected. Nonetheless, the benefits of interconnectivity come at a price as interconnected supply chains would be more exposed to political and social turbulences as exemplified by the Anglo-Sino trade war and the Covid-19 pandemic respectively.
In order to mitigate the potential risks brought about by interconnectivity, the introduction of cognitive abilities as part of the operations of global supply chains chains using AI-based 3D information processing models would imbue these chains with an element of omniscience which humans can only wish to have.
Coupled with the use of blockchain to secure the factual value of the information fed into global supply chains, it is clear that the path forward is for the transformation of supply chains into blockchains.
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