Non-fungible tokens (NFTs) have the potential to completely disrupt the supply chain industry (in a good way) by simply and effectively removing common pain points that lead to massive disruption. This is in part because of their digital footprint and data tracking capabilities.
While 2021 will be remembered as the year of the supply chain disaster, supply chain hiccups actually happen quite often and cost businesses millions every year. From integration to production to transportation, NFTs and blockchain (distributed ledger technology) can reduce costs, remove bottlenecks, create greater transparency in supply networks, and help to avoid chaos.
Why are NFTs a supply chain solution?
Instead of the long, extensive and complex paper traces that accompany the ownership and transactional activity of a variety of items, NFTs create digital fingerprints or a “token identifier” that attaches to that item throughout. of its lifespan. The uniqueness of each NFT is specifically defined by the information stored in the NFT’s metadata – pointing to valuable digital assets that are updated in real time on the blockchain.
For the supply chain, NFTs allow participants to access the same immutable record on the general ledger, potentially reducing and eliminating discrepancies in the flow of information between parties. These features of blockchain transparency and immutability ensure the reliability and authenticity of supply chain data. As such, NFTs can increase efficiency and reduce costs incurred in the process of sourcing and acquiring the goods and services that a business needs. NFTs also produce an end-to-end view of part location, quantity, and other useful information.
Avoid Today’s Supply Chain Problems Using NFTs
A delay in just one section of the supply chain can lead to the complete collapse of the entire journey. For example, in the automotive industry, cars contain hundreds or even thousands of parts from all over the world. If any of these items, whether it is an oil filter or a complex dashboard touchscreen, is missing, the vehicle cannot be finished and the production facility shuts down. .
Because NFTs create a digital identity for any item (from chips to car batteries), the item’s real-world metadata, such as its identity, current physical location, responsible party, possession, temperature of the item. container and other measures, should be attached to it – collect useful information about its condition, location, etc. This data is automatically updated when conditions change (via time stamping to geolocation of a transported good), presenting an accurate and timely view of the physical object to all parties involved.
Therefore, if a part in China is delayed, the manufacturer will know well in advance and have the option to source from another location like India, which will allow the supply chain to function.
Many organizations have already started using blockchain to track their product’s journey through the supply chain, from point of origin to customer.
Supply chain operators leverage the NFT framework, leveraging the uniqueness and traceability of assets to help demonstrate provenance and prevent counterfeit products from entering the market.
An example of this technology already put to good use is the luxury goods market, where operators have teamed up to launch a blockchain platform. When consumers purchase a high-end watch, handbag or piece of jewelry, they receive a corresponding unique NFT, which indicates the origin of their product, including information about the materials and the manufacturing process. This means that all of these products can be authenticated individually. NFTs can be used to identify and trace the entire supply chain.
Moving from fashion to pharma, the traits of transparency and immutability of NFTs are still attractive and effective. Take the example of pharmaceutical manufacturing. NFTs and blockchain can support the fight against counterfeit pharmaceuticals by streamlining the authentication process. In addition, monitoring the process through the system will allow immediate identification of problems allowing problems to be resolved more quickly.
While the technology can be used to identify fake prescriptions, it can also be deployed as a highly effective solution for pharmaceutical sustainability. Indeed, when using this technology, customers have visibility into the conditions of each product throughout its journey through the supply chain, including storage locations, environmental factors (temperature and humidity) and the duration of storage. An NFt attached to a pharmaceutical has the potential to protect consumers from some very bad drugs.
A “single source of truth” in supply chains
When all parties involved in a particular supply chain operate from a “single source of truth”, discrepancies, mismanagement and miscommunication can all be avoided. Secure data sharing and seamless coordination across the supply chain (all made possible by NFT technology) are already being deployed by forward-thinking companies who understand the issues. The continued deployment of NFTs (coupled with artificial intelligence) in this industry will only prevent catastrophes like “The Great Disruption” of 2021.