More than ever, governments worldwide are demanding increased visibility and accountability across the supply chain’s of large organizations. For example, Germany enacted its newDue Diligence Act (LkSG) this year, requiring German and German-registered branches of foreign companies with over 3,000 employees to comply with human rights and environmental requirements across their entire supply chain. Penalties for noncompliance are steep—up to 800,000 euros or 2% of annual revenues, and disqualification of participation in government contracts for up to three years.

Notably, the implications of the Due Diligence Act are global. For instance, if a German car manufacturer has plants in Mexico or the United States, they must identify, prevent, and address human rights and environmental abuses within their operations and their vendors. In 2024, the law will become even more stringent, requiring companies with over 1000 employees to comply.

The World Wants Transparency

Germany isn’t the only country introducing such regulations. The E.U. is slowly rolling out its “Product Passport” as part of the Ecodesign for Sustainable Products Regulation (ESPR) for various industries. Since 2019, Australian companies with an annual revenue of more than $100 million have been required to  identify the risk of slavery within their supply chains. The USA set similar requirements in 2022 for any company importing from the Xinjiang region of China under the Uyghur Forced Labor Prevention Act. In addition, the 2022 CHIPS act prohibits funding recipients from expanding semiconductor manufacturing in China or other countries that pose a national security threat to the United States as defined by law.

While increased supply chain transparency is valuable, and now required, it’s not inherently easy to achieve. Supply chains are generally complex, with multiple vendors in between manufacturers and consumers—each with their own data systems that are not necessarily designed for sharing information. And while Electronic Data Interchange (EDI) systems can help overcome this challenge, most are becoming increasingly expensive, fail to provide real-time insights, and remain extremely difficult to set up across complex networks.

Fortunately, blockchain is perfectly positioned to solve these supply chain data challenges.Specifically, as a powerful decentralized technology, blockchain is inherently transparent, secure, and can be permissioned to control which data is available to individual stakeholders. In short, blockchain ensures your data reflects one item, in one place, at one time—and everyone can see only the information you want them to.

Why Use Blockchain?

Blockchain retrieves all the processing, data, and communications across business networks from a cohesive system. This dynamic contrasts with a traditional B2B/EDI approach where data, processing, and exchange occurs across multiple platforms.

As organizations continue to collect and analyze vast amounts of data, blockchain-based infrastructure can help address the limitations of EDI systems. Specifically, blockchain provides shared, real-time, transparent information stored on an immutable (permanent) ledger. In addition, this data can only be accessed by those with appropriate permissions. In general, the benefits of building with blockchain can be summarized as follows:

  • Transparency: On-chain transactions are visible to all network stakeholders.
  • Traceability: Anything can be tokenized and tracked throughout its lifecycle.
  • Immutability: Transactions can’t be manipulated once recorded to the blockchain.
  • Security: Blockchain permissions dictate who can access select networks or verify transactions.
  • Speed: Using automated smart contracts eliminates intermediaries and optimizes processes.

Recognizing these benefits, many organizations have started using blockchain technology to track the journey from producers to consumers. For example, Boeing uses blockchain to track wing parts for F/A-18s across all their stakeholders (read our case study here). BMW is also tracing parts with blockchain while Walmart Canada is leveraging the technology to manage interactions with vendors, reducing disputes from 70% to 1%.

But despite the benefits of working with blockchain, many enterprises aren’t sure where to start. That’s because blockchain isn’t necessarily easy to set up—especially across your entire supply chain network. In most cases, building an in-house solution requires expensive developer resources that are hard to find. Specifically, the process involves building each smart contract individually, ensuring each vendor is on the same network as you, and then connecting each vendor’s legacy system to the blockchain of choice.

Making Blockchain Accessible

At SIMBA, we are uniquely positioned to understand these challenges—that’s why we built Blocks. Specifically, the powerful platform is designed to help Web2 organizations integrate seamlessly with Web3 solutions using dynamic APIs. Using SIMBA’s multi-chain interoperability, vendors can choose their protocol and still connect with each other. SIMBA Blocks is also highly scalable and delivers simple developer tooling and smart contract management.

This functionality unlocks powerful collaborative potential. For example, let’s say an organization aims to build a blockchain solution to track their item from manufacturer to consumer. With Blocks, their vendors can build on Ethereum or Polygon even if they’re building on Quorum or Hyperledger Fabric. Neither the organization nor their vendors need to spend countless hours building data connections to their legacy systems—it’s done instantly through dynamic APIs.

A SIMBA customer, Toks, is a shining example of how blockchain technology can be easily adopted and solve multiple supply chain challenges—offering increased visibility and profits while reducing redundancy. The 200+ chain restaurant began tracking their coffee beans from farmers to consumers using  blockchain in 2021. Specifically, the company taught local farmers (most of whom had never used a smartphone) how to scan their products, allowing them to start  tracking each stage of the production process. This insight ensures Toks coffee beans are verifiable as Certified Organic and Rain Forest Alliance compliant. The project led to a reduction of intermediaries, increased farmers’ revenues by 600%, and increased Toks’ profits. You can learn more about Toks in our case study.

The Future of Supply Chain Is Transparent

Whether it’s from the carrot or the stick, organizations are working to become more transparent across their supply chains—and blockchain is a highly viable solution. Unlike centralized platforms, blockchain solutions utilize decentralized infrastructure built for supply chain transparency. The suitability of blockchain becomes even more apparent when recognizing that all supply chains are inherently decentralized. Simply put, SIMBA Chain makes it easy for organizations to build blockchain applications, going from proof of concept to production in weeks or months. Contact us to try SIMBA Blocks (for free) or learn more about how you can kickstart your blockchain journey!