This document provides an overview of how blockchain can be applied in supply chain and manufacturing contexts. It discusses how blockchain can help with vendor payments, inventory management, asset tracking, regulatory audits, raw material tracking, invoice and receipt management, production tracking, and more. The key benefits mentioned include increased efficiency, transparency, security, traceability, and cost reductions compared to traditional methods. Examples are given of companies already using blockchain for applications like tracking materials from farm to store.

1. Blockchain
Training
Course

2. Tools

3. Table of
Contents
Supply-chain
● Vendor Payment
● Inventory Management
● Asset Tracking
● Regulatory Audit & Security
Manufacturing
● Raw Material Tracking
● Invoice & Receipt Management
● Production Tracking
● Regulatory Audit & Security

4. In this module you will-
● Understand Vendor Payment and Inventory Management
● Learn Asset Tracking and Regulatory Audit & Security
● Understand Raw Material Tracking and Invoice & Receipt
Management
Learning Objectives

5. Supply Chain
Vendor Payment

6. You might think, what has blockchain to
do with Supply chain, vendor payments,
asset tracking and regulatory audit.
Right?

7. Let us first understand what is Supply Chain?

8. A supply chain is defined as the entire process of
making and selling commercial goods, including
every stage from the supply of materials and the
manufacture of the goods through to their
distribution and sale. Successfully managing
supply chains is essential to any company.
Supply Chain

9. Supply Chain

10. American Express says: “Blockchain technology promises to
facilitate fast, secure, low-cost international payment processing
services (and other transactions) through the use of encrypted
distributed ledgers that provide trusted real-time verification of
transactions without the need for intermediaries such as
correspondent banks and clearing houses”
Vendor Payment

11. Bext360 is using blockchain technology to better track all elements of the
worldwide coffee trade—from farmer to consumer—and thereby boost supply-
chain productivity. Using cryptocurrencies, this application of blockchain in the
supply chain ensures payment directly to the farmers immediately after their
products are sold
Example

12. ● There has been a good deal of interest around blockchain and supply chain finance
solutions because it can increase the efficiency of invoice processing and provide
more transparent and secure transactions while increasing the efficiency of invoice
processing
● The ability of blockchain-based cryptocurrencies to enable cross-border funds
transfers without the need for banks and clearing means blockchain technology in
the supply chain can speed payments while reducing the incurred fees
Vendor Payment

13. ● However, the development of smart contracts–such as through the Ethereum
platform–means that many supply chain operations can be triggered automatically
through the smart contract
● For example, a smart contract may set out the agreed delivery of a product and what
should happen if the delivery is late or missed.
Vendor Payment

14. ● The contract can monitor the delivery and automatically trigger actions where the
terms are breached. This significantly reduces costs, especially where third parties
had been previously used to conduct part of the process.
Vendor Payment

15. Inventory
Management

16. Let us see an example of a transaction showing the difference in
conventional and Blockchain system
The Participants
Inventory Management

17. Step 1
Inventory Management

18. Step 2
Inventory Management

19. Step 3
Inventory Management

20. Step 4
Inventory Management

21. Step 5
Inventory Management

22. Step 6
Inventory Management

23. Asset Tracking

24. FAST TRANSACTION SETTLEMENT
Transactions are processed directly from
peer to peer with fewer intermediaries and
ledgers get updated automatically
Asset Tracking

25. ANTI-COUNTERFEITING
Blockchain asset tracking can combat
counterfeits. RFID tags can track and trace
assets throughout the entire supply chain
until they reach the consumer’s hands
Asset Tracking

26. IMMUTABLE & RELIABLE
Blockchain technology is resilient and
does not have any single point of failure.
Transactions processed in the blockchain
are immutable and irrevocable
Asset Tracking

27. LOW COST
Automated smart contracts to validate
transactions, Less use of intermediaries, no
reconciliation of work help to reduce the
supply chain cost overall
Asset Tracking

28. ● Many companies are exploring the use of blockchain technologies to help track detailed
information about materials, components, and ingredients
● Blockchain technologies can track the origins of raw materials and follow domestic and
international supply chains to help meet the increasing demand for consumer information
about globally produced goods
● This provides more transparency and accuracy about a product’s long journey to the store
Asset Tracking

29. Top Use Cases in Supply
Chain
Supply Chain Finance
There has been a good deal of interest around blockchain and supply chain
finance solutions because it can increase the efficiency of invoice processing
and provide more transparent and secure transactions while increasing the
efficiency of invoice processing

30. Top Use Cases in Supply
Chain
Supply Chain Logistics
The promise of blockchain in supply chain logistics, according to DHL, is that
transactions can be verified, recorded and coordinated autonomously without
third parties–eliminating an entire layer of complexity from global supply
chains.

31. Top Use Cases in Supply
Chain
Supplier Payments
Blockchain technology promises to facilitate fast, secure, low-cost
international payment processing services (and other transactions) through
the use of encrypted distributed ledgers that provide trusted real-time
verification of transactions without the need for intermediaries such as
correspondent banks and clearing houses

32. Top Use Cases in Supply
Chain
Food Safety
Many food safety issues, such as cross-contamination, are difficult to track
and isolate. The lack of data and supply chain visibility leads to slow action
when an issue arises and well as unnecessary waste and the economic and
reputational cost of recalls.

33. Regulatory
Audit
&
Security

34. ● Execution errors such as mistakes in inventory data, missing shipments, and
duplicate payments are often impossible to detect in real time
● Even when a problem is discovered after the fact, it is difficult and expensive to
pinpoint its source or fix it by tracing the sequence of activities recorded in available
ledger entries and documents
Regulatory Audit & Safety

35. ● Although ERP systems capture all types of flows, it can be tough to assess which
journal entries correspond to which inventory transaction
● This is especially true for companies engaged in thousands of transactions each day
across a large network of supply chain partners and products
Regulatory Audit & Safety

36. One common approach to improving supply chain execution is to verify transactions through
audits. Auditing is necessary for ensuring compliance with contracts, but it is of limited help in
improving decision-making to address operational deficiencies.
Regulatory Audit & Safety

37. When blockchain record keeping is used, assets such as units of inventory, orders, loans, and bills
of lading are given unique identifiers, which serve as digital tokens (similar to bitcoins).
Additionally, participants in the blockchain are given unique identifiers, or digital signatures, which
they use to sign the blocks they add to the blockchain. Every step of the transaction is then
recorded on the blockchain as a transfer of the corresponding token from one participant to
another.
Regulatory Audit & Safety

38. Regulatory Audit & Safety Example
Consider how the transaction looks when represented on a shared blockchain
First, the retailer generates an order and sends it to the supplier. At this point,
since no exchange of goods or services has taken place, there would be no
entries in a financial ledger. However, with blockchain, the retailer records the
digital token for the order. The supplier then logs in the order and confirms to
the retailer that the order has been received—an action that again gets recorded
on the blockchain but would not generate an entry in a financial ledger. Next
the supplier requests a working-capital loan from the bank to finance the
production of the goods. The bank verifies the order on the shared blockchain,
approves the loan, and records the loan’s digital token on the same blockchain.
And so on.

39. Raw Material
Tracking

40. Raw Material Tracking

41. ● European grocery chain, Carrefour, uses IBM Food Trust to trace chickens from farm to
grocery store
● In 2019, Carrefour reported that its blockchain-tracked chicken outperformed other chicken
in sales growth
● Carrefour credits blockchain with sales increases because blockchain reassures customers
of the quality of items they buy and assists them with avoiding products with genetically
modified organisms, antibiotics or pesticides
Raw Material Tracking

42. ● In fact, Carrefour tags certain products, such as tomatoes, oranges, fresh micro-filtered milk,
and Rocamadour cheese, with QR codes that allow consumers to learn where their food
originated by taking a picture of the QR code with their smartphones
Raw Material Tracking

43. Raw Material Tracking

44. Blockchain works to track the
provenance of a good thanks to digital
tokens that are issued by each
participant in the supply chain to
authenticate its movement. Every
time the item changes hands, the
token moves in lockstep. The real-
world chain of custody is mirrored by
a chain of transactions recorded in
the blockchain.
The token acts as a virtual
“certificate of authenticity” that is
much harder to steal, forge or hack
than a piece of paper, barcode or
digital file. The records can be
trusted and greatly improve the
information available to assure
supply-chain quality.
Raw Material Tracking

45. Invoice
&
Receipt
Management

46. Blockchain promises to eliminate pain
points, such as invoice processing
and supplier financing, that have
plagued the manufacturing space for
years
Invoice & Receipt Management

47. ● When manufacturers and their suppliers use blockchain, they can add functionality that
flags and resolves partial shipments, short shipments, or damaged goods.
● Instead of processing and verifying invoices, they can use an evaluated receipt
settlement process that automatically posts and pays invoices based on the purchase
order and the settled goods receipt record in the blockchain.
Invoice & Receipt Management

48. ● The immutable blockchain ledger keeps both buyers and suppliers on the same
page, eliminating the need to constantly reconcile data.
● It adds a level of transparency that the supply chain is currently lacking.
Invoice & Receipt Management

49. Traditional payment processes tend to be opaque, based on paper, with little or no
audit trail available. Debtors can easily delay payment by hiding behind bureaucracy or
claiming demands are held up or lost. Request Networks, TallySticks and Applied
Blockchain are just some of the companies seeking to change all this by shaking up
business invoicing using blockchain.
Invoice & Receipt Management

50. Production
Tracking

51. ● The physical production process is fully reflected in the blockchain
● It works across multiple entities, as they cannot proceed without the correct input
● Every step of the production process is accountable, and therefore traceability is not
only provided for a single product, but also for its ingredients
● Depending on the interval in which new blocks are added to the blockchain, the block
creation timestamp informs about the time and date when a given product has been
manufactured.
Production Tracking

52. ● As products are handled in batches, input information is available by batch.
For example:
A batch of edge-glued wood could be traceable to a batch of 100 logs. In order to
accomplish traceability for single goods, it should be declared as its own batch.
However, fine-grained traceability comes with the cost of higher transaction counts.
Production Tracking

53. Regulatory
Audit &
Security

54. One of the most exciting features of blockchain from the compliance perspective is its
practical immutability: as soon as data is saved into the chain, it cannot be changed or
deleted. That is why blockchain is used as the document or proof for the transfer of any
digital asset, for example bitcoins or other digital currencies.
Regulatory Audit & Security

55. From sourcing raw materials delivering the finished product, blockchain can increase
transparency and trust at every stage of the industrial value chain. Pain points it could help
address include:
● Supply-chain monitoring for greater transparency
● Materials provenance and counterfeit detection
● Engineering design for long-duration, high-complexity products
● Identity management
● Asset tracking
● Quality assurance
● Regulatory compliance
Regulatory Audit & Security