One of the biggest challenges facing UK companies will be navigating the inevitable market turbulence associated with next year’s departure from the European Union. A key reason for this is the critical role that the supply chain plays in the movement of goods and services, both internally and across borders. Currently, many organisations are concerned potential delays to border check processes and changes to legislation could leave them short of vital resources.
In the manufacturing sector, recent polling has suggested that these organisations are braced for the worst profits outlook in at least nine years, with many choosing to freeze spending until the ramifications of the departure become clear. Likewise, in the automotive sector, where instant supply processes are critical for keeping costs down, the impact of late payments or delivering of critical vehicle parts could have a devastating impact on production.
Against this backdrop, there have been numerous reports of companies stockpiling supplies to prevent potential problems from gaining a foothold. In the food and beverage sector, it has been reported that Majestic Wine is planning to stockpile 1m bottles, manufacturing firms are also under pressure aerospace suppliers are said to be pushing smaller suppliers to the brink. It is logical to make necessary preparations for potential border delays due to the UK’s changing relationship with Europe, but could there be a better way forward for the supply chain?
It is clear that organisations can only operate effectively with easy access to products and services. Likewise, no organisation can continue to grow if late payments and poor procurement processes remain in place.
This is where blockchain technology can play a crucial role, in both the modernisation and improvement of the logistics and operations which are vital to the performance of supply chain systems. In a recent poll of 200 UK business decision-makers, we discovered that over 50% were planning to increase use of blockchain technology within their respective organisations next year.
When asked to rank the key reasons why companies would be planning to increase blockchain use, one third (33%) said they will be using it to reduce fraud followed by 18% saying it was to keep up with technological innovation. Additionally, 11% cited costs savings and 10% said they would be using it to improve supply chain management. It is clear that many companies are investigating the best application for the technology, with many seeking to expand capabilities within that area.
The business case for adopting such a system is becoming increasingly clear, particularly with stricter regulation and legislation taking hold. For example, the ability to demonstrate secure transactions in a distributed ledger that cannot be tampered with is a major benefit to companies when preparing for an annual audit or quarterly stock take. This removes the need for complex investigations, as every point of contact is logged, allowing companies to examine and demonstrate true accountability.
Tackling late payments is another area where blockchain can provide a major advantage.
For many organisations, poor payment processes can have a serious impact on profitability and cashflow, which in turn damages productivity and by definition, wider economic growth. Blockchain is already being deployed by major financial services organisations to help manage complex contractual agreements and provide insight into the flow of money between banks, businesses and individuals.
Moving forward, organisations need to recognise that the digitisation of supply chain systems is essential to increasing productivity and ensuring an efficient flow of payments and revenue.
Blockchain can deliver these critical capabilities alongside maximum accountability. That’s why such investments are critical in challenges times.