Supply chains need to adapt to economic and geopolitical challenges in order to keep global trade running. A great way to do that is through the implementation of technology that improves trust and transparency. 

NFTs can be one of those technologies. 

NFTs, or non-fungible tokens, are unique digital tokens that can be used to verify ownership. 

People mostly trade NFTs like digital art or collectibles, but these tokens are also finding real-world use in different sectors. For supply chains, NFTs can contain key details about an item: its features, origin, and its entire path from factory to shelf. 

Read on to learn about five use cases of NFTs in supply chain management. 

Provenance and Traceability

Having a record of a product’s full history is a big advantage for supply chain participants because it improves transparency, quickens problem resolution, and builds trust with consumers.

With NFTs, traceability becomes more streamlined. The token’s code contains records regarding components, production, and logistics. This information remains immutable but also transparent, so everyone in the supply chain can see it.

For example, an NFT can tell what kind of leather and fabric were used to produce limited-edition sneakers, where they were packaged, and how they traveled to a store. This proves they’re real. Buyers can easily scan a QR code on the label to check this info and confirm authenticity.  

Counterfeit Prevention

There are many ways counterfeiters exploit supply chain vulnerabilities. They thrive where there’s poor due diligence, grey markets; they infiltrate subcontracting chains and prey on hype around new releases. NFTs can put a stop to many of those schemes.   

Again, the method is centered around a unique digital ID assigned to every real product. An NFT can act as a certificate of authenticity, instantly verifiable via a QR code, an RFID, or an NFC tag. 

There is no way counterfeiters could change the product data embedded on a blockchain. 

However, manufacturers need to make scannable labels tamper-proof and undetachable, incorporated directly onto a product. This could entail additional expenses but avoiding supply chain issues and ensuring consumer trust might be worth the spending.  

Quality Assurance

NFTs can vastly improve how quality checks are done. 

Each token can hold the record for every quality inspection a product goes through. This includes details like test results, sensor data (such as temperature or humidity), and official certifications. 

If a quality issue comes up, businesses can instantly check the NFT’s history. This helps determine exactly where and when a problem occurred, making it faster to fix. Therefore, NFTs ensure better compliance, fewer errors, and more consistent product quality.

Transparency

It’s natural that people want to know more about the products they buy. Many of them genuinely care about where things come from and if they are produced in decent and safe conditions.

NFTs make supply chains much more open. 

Companies can use them to share clear details about how products are sourced, who made them, and their environmental impact. This public record helps build trust with buyers and shows that a business is acting responsibly from start to finish.

Invoicing and Payments

Handling invoices and payments in a supply chain can be complex and slow. Manual processing, errors, and payment delays can create major issues for businesses. NFTs can make these financial processes much smoother and faster. 

An NFT can represent a digital invoice or a purchase order. Because this NFT is unique and sits on the blockchain, it becomes a tamper-proof record of the agreement.

When the goods arrive and pass quality checks, the NFT can be used to trigger a payment. This removes delays and reduces human errors. It also offers more transparency, allowing all parties to see the payment status in real-time. 

This can speed up cash flow for suppliers and reduce disputes, making the whole payment process more efficient and secure for everyone involved.

Summing Up 

NFTs provide an exciting opportunity for supply chains. They could be used to solve existing problems and make global trade work better and more reliably.

We’ve seen how NFTs make provenance and traceability clear, showing a product’s whole history. They’re also great for counterfeit prevention, giving items unique digital IDs to prove they’re real.

NFTs help with quality assurance by keeping records of every check. They make things more transparent for ethical sourcing. 

NFTs are just starting in supply chains. Their unique, unchangeable digital records are essential for a more open, effective, and dependable future in global business. It will be interesting to see how well this technology finds its footing in the global supply chain.